EUR/JPY Price Forecast: Softens to near 185.50, but maintaining constructive bias above 100-day SMA

Market impact: Mildly bullish EUR/JPY, but with growing downside event risk from the JPY side.

The key change is not the modest pullback toward 185.50, but the stronger market pricing for a Bank of Japan rate increase in September following firmer July inflation. That raises Japanese yields and reduces the carry advantage of holding EUR against JPY, creating a fundamental headwind for EUR/JPY. Markets were pricing approximately an 82% probability of a September BoJ hike, while upcoming comments from Deputy Governor Ryozo Himino could further influence expectations for the pace of normalization.

Technically, the pair remains constructive while above the 100-day SMA near 185.15. The RSI is positive but not overbought, leaving room for renewed upside if JPY strength fades. A sustained move above the cited 187.35 resistance would reinforce the broader uptrend, while a break below 185.15 would weaken the technical structure and shift attention toward the 184.00 area.

The immediate bias is therefore mixed-to-positive rather than decisively bullish:

• Bullish EUR/JPY case: The 100-day SMA continues to attract support, and a less hawkish BoJ communication or renewed risk appetite could revive euro-yen carry demand.
• Bearish EUR/JPY case: Confirmation that the BoJ remains on a quarterly-hike path, especially if Himino signals greater confidence in inflation, could strengthen JPY and pressure the cross below its moving-average support.
• Broader market linkage: A risk-off move would likely amplify JPY demand because of its safe-haven characteristics, while higher European yields or a more hawkish ECB relative to the BoJ would support the euro side of the cross.

The short-term outlook depends more on BoJ communication and Japanese rate-market repricing than on the technical pullback itself. Traders should monitor Himino’s August 27 speech, Japanese bond yields, September-hike expectations, EUR/USD direction, and whether EUR/JPY can hold 185.15 or reclaim 187.35. The medium-term bullish structure remains intact only while support holds; a decisive break would indicate that BoJ normalization is beginning to dominate the technical setup.