Bank of Japan policy uncertainty leaves EUR/JPY consolidating near support

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Euro vs yen slides 0.51% today

Highlights

The yen rebounded from a three-week low against the dollar as buyers returned at lower price levels.
Market participants await the late October Bank of Japan meeting for potential clarity on future interest rate policy.
EUR/JPY trades below key technical averages with indicators showing prevailing bearish momentum and an expected range of ¥175.56 to ¥177.32.

Yen rebound and BOJ policy outlook drive cross dynamics

The Japanese yen began recovering from a three-week low against the US dollar, with renewed buying interest seen at lower levels even as domestic producer price data underperformed, according to Economies. This rebound in the yen has shaped cross-currency action, offering a firmer backdrop against the euro. Market participants are also watching for signals from the Bank of Japan's upcoming late October meeting, which could clarify the outlook for interest rate policy and affect the yen's performance versus major counterparts.

Technical momentum weak as key resistance caps upside

On the technical side, EUR/JPY is positioned below its MA-20 and MA-50 on the hourly chart, and remains well under the MA-200 on the daily timeframe. The Ichimoku Kijun is located at ¥177.17, acting as immediate resistance. Momentum indicators continue to signal a selling environment, with both MACD and ADX aligned negatively. RSI, Stoch RSI, and CCI are in oversold territory, highlighting stretched conditions, while Bull/Bear Power shows sellers are dominant in the intraday range. The Awesome Oscillator is neutral, indicating no clear countertrend signals.

Downside bias persists amid defined volatility corridor

Looking ahead to the next two to three trading days, EUR/JPY is expected to remain within a volatility band of ¥175.56 to ¥177.32. The probability scenario favors further downside in the short term, with the baseline expectation being range-bound trading inside this corridor. A decisive break above ¥177.17 would be required to initiate a bullish reversal, while a drop below ¥175.56 could open the path for further losses.

Anton Kharitonov, expert at Traders Union, sees EUR/JPY trading under technical pressure with bearish momentum signals dominating. He notes that the yen's rebound and cautious sentiment ahead of the Bank of Japan meeting offer little scope for optimism. Kharitonov believes the cross is unlikely to break out without a clear catalyst. "Unless EUR/JPY reclaims ¥177.17, I remain defensively positioned and expect further downside risk to persist."

Earlier, analysts noted that EUR/JPY faced sustained downside pressure amid political uncertainty in the euro zone and technical weakness. The current article confirms this bearish scenario, highlighting that further losses remain a risk unless EUR/JPY can reclaim resistance above ¥177.17 in the coming sessions.

Source of Data: EUR Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.