EUR/JPY Price Forecast: Declines below 181.50 with emerging oversold RSI

Market impact: Bearish EUR/JPY, but with elevated rebound risk.

The main market-moving factor is a potential shift toward a more hawkish Bank of Japan. Guidance that the BoJ could raise rates in September and continue tightening into early 2027 would support the yen by narrowing the expected euro–yen yield differential and encouraging the unwinding of carry trades. This is negative for EUR/JPY and could also weigh on other yen crosses, particularly if Japanese wage and inflation data reinforce the case for policy normalization.

The bearish technical structure strengthens that interpretation: EUR/JPY is below its 100-day moving average and the 20-day Bollinger midpoint, while the reported break beneath 181.50 leaves the recent 180.23 low and the 180.00 psychological level as important downside areas. A sustained move below those zones would indicate that the BoJ-related repricing is becoming a broader trend rather than a short-lived reaction.

However, the RSI is approaching oversold territory rather than confirming an exhausted decline. That creates a meaningful risk of short-covering, especially if EUR/JPY stabilizes above 180.23 or if upcoming ECB communication is more hawkish than expected. The ECB is also expected to raise rates, so the cross is not facing one-sided policy divergence; the key question is whether markets price a faster or more durable BoJ tightening cycle relative to the ECB.

Trading interpretation:

the near-term bias remains negative below the 181.40–181.50 area, but downside momentum may become less reliable as oversold conditions develop. A recovery through that zone would weaken the immediate bearish setup, while renewed selling below 180.23 would expose the 180.00 and 179.37 regions cited in the analysis. These are technical reference points, not guaranteed targets.

What to monitor next:

Japanese wages, inflation-sensitive data and official BoJ commentary; the ECB decision and forward guidance; EUR/JPY reaction around 180.23/180.00; and broader risk sentiment. A risk-off environment could amplify yen demand, while a strong European policy repricing or reduced confidence in the BoJ hike path could trigger a sharp corrective rebound.