Currency markets are showing a split picture in yen-related pairs during the latest session. EUR/JPY extended its upward move toward 186.00, supported by a firmer euro and persistent yen weakness. In contrast, USD/JPY remains capped by the 20-day exponential moving average, with the yen gaining ground on expectations of a policy shift from the Bank of Japan.
The euro's strength comes as markets expect the European Central Bank to maintain a relatively hawkish stance compared with other major central banks. Eurozone economic data, while mixed, has not been weak enough to fuel aggressive rate-cut bets. This has helped the single currency hold its ground against the yen, which remains under pressure from the Bank of Japan's ultra-loose monetary policy in the EUR/JPY trade.
From a technical viewpoint, EUR/JPY's bullish bias is reinforced by its position above key moving averages. Immediate resistance is seen near 186.50, with a break above that opening the door toward 187.00. Support is located around 185.50, followed by the 185.00 psychological level. A sustained move below 185.00 could signal a short-term pullback, but the broader trend remains constructive while the pair holds above the 200-period moving average on the hourly chart.
Meanwhile, USD/JPY has repeatedly tested the 20-day EMA but failed to close above it, suggesting sellers are defending the level. The yen's resilience is not merely technical: traders are increasingly pricing in potential policy normalization by the Bank of Japan after recent comments hinted at a shift away from negative interest rates. This has narrowed the yield differential between U.S. and Japanese bonds, reducing the dollar's appeal. Fragile risk sentiment has also boosted the yen's safe-haven demand.
For traders, the key levels are clear: a daily close above the 20-day EMA in USD/JPY could signal a short-term bullish reversal, while rejection from that area would confirm continued bearish pressure. In EUR/JPY, buying on dips may be preferred while the bullish bias remains intact, though intervention warnings from Japanese authorities present a tail risk. Central bank commentary and upcoming economic data from the eurozone, Japan, and the United States will likely determine the next moves in both pairs.
