The EUR/JPY cross is currently trading near 158.80 during the early European session on Wednesday, showing a 0.06% decline for the day. The negative sentiment surrounding the cross is evident through the bearish Relative Strength Index (RSI) indicator. The immediate resistance level for the cross is at 161.80, while the first support level is observed at 158.10.
In terms of technical analysis, EUR/JPY maintains a bearish outlook on the daily chart as it remains below the crucial 100-day Exponential Moving Averages (EMA). The downward momentum is further supported by the RSI, which is below the midline around 45.80, indicating potential for further downward movement in the near future. The initial support level is at 158.10, with a break below this level leading to a decline towards 155.60 and potentially even 154.41. On the upside, the first barrier is at 161.80, followed by 163.15 and the psychological level of 164.00.
The performance of the Japanese Yen (JPY) is influenced by various factors, such as the economic performance of Japan, policies of the Bank of Japan, yield differentials between Japanese and US bonds, and risk sentiment among traders. The BoJ has intervened in currency markets in the past to control the value of the Yen, usually to weaken it. The ultra-loose monetary policy of the BoJ from 2013 to 2024 caused the Yen to depreciate against other major currencies, but recent policy changes have provided some support to the Yen.
In the last decade, the policy divergence between the BoJ and other central banks, particularly the US Federal Reserve, has favored the US Dollar against the Japanese Yen due to widening differentials in bond yields. However, the gradual shift away from ultra-loose monetary policy by the BoJ and interest rate cuts by other central banks are narrowing this gap. The Japanese Yen is often considered a safe-haven investment during times of market volatility, as investors seek its stability and reliability, leading to an increase in its value against riskier currencies.
Overall, the EUR/JPY cross faces downward pressure in the current market environment, with technical indicators supporting further declines. The Japanese Yen’s performance is influenced by various factors, including BoJ policies and risk sentiment among traders. In the coming days, market participants will closely monitor key support and resistance levels to gauge the direction of the EUR/JPY cross and the broader performance of the Japanese Yen in global markets.
