The Japanese yen continued to assert its strength against major European counterparts on Tuesday, with both the British pound and the euro facing critical technical rejections at their respective 200-day simple moving averages (SMAs). The bearish momentum in GBP/JPY intensified, pushing the cross to test the long-term moving average support, while EUR/JPY saw its recent rebound stall firmly below the same indicator, signaling broad-based yen outperformance.
GBP/JPY breakdown intensifies
The pound–yen pair slid to hover near its 200-day SMA, a level that has historically provided strong support. Sellers retained control after several sessions of downward pressure, and technical indicators like the Relative Strength Index (RSI) approached oversold territory. A decisive close below the SMA would open the door to further downside, with the next support zone lurking at the recent swing low. Conversely, a bounce could trigger a short-term correction, but the overall trend remains firmly bearish. The divergence between the Bank of England’s paused rate cycle and the Bank of Japan’s potential shift away from negative rates has narrowed the yield differential, making the yen more attractive.
EUR/JPY recovery hits a wall
Meanwhile, the euro–yen cross saw its rebound stall just below its own 200-day SMA, near the 158.50 handle. The pair struggled to break above this pivotal resistance, with sellers active at higher levels and buyers lacking sufficient momentum. Eurozone economic data painted a mixed picture—inflation remains above target but growth is slowing—while the ECB’s policy stance offers little aggressive support for the euro. Speculation about a future BoJ policy adjustment continues to lend sporadic strength to the yen, further capping EUR/JPY rallies. Immediate support lies at 157.50, with a break below there potentially targeting the 157.00 psychological level.
Macro drivers and trader implications
The yen’s broad strength reflects a combination of safe-haven demand amid global uncertainty and mounting expectations that the Bank of Japan may eventually tweak its ultra-loose monetary policy. For forex traders, the 200-day SMA acts as a critical inflection point across both pairs—a breakdown in GBP/JPY could accelerate stop-losses and deepen the sell-off, while a failure to reclaim the SMA in EUR/JPY keeps the pair in a consolidation-to-lower range. Upcoming releases, including UK GDP and Japanese inflation data, will provide fresh catalysts for these closely watched levels.
