EUR/JPY Price Forecast: Softens to near 179.00, bearish bias remains intact below 100-day SMA

Market impact: bearish EUR/JPY, but increasingly vulnerable to a short-covering rebound.

The main market-moving factor is the expected Bank of Japan tightening at the September 17–18 meeting. A 25-basis-point hike to 1.25% is reportedly largely priced in, meaning the yen may not strengthen substantially unless Governor Ueda signals a faster tightening path, indicates further hikes, or the decision surprises with a larger move. That creates asymmetric event risk: a hawkish outcome could extend EUR/JPY losses, while a fully anticipated hike combined with cautious guidance could trigger profit-taking in JPY longs and a corrective rebound in the cross.

Technically, the setup reinforces the bearish interpretation. EUR/JPY is below its 20-day and 100-day moving averages, with initial support near 178.42 and the lower Bollinger band around 177.80. A sustained break of that area would signal that the decline is broadening rather than merely testing support. However, the RSI near 28 indicates oversold conditions, increasing the probability of sharp intraday rebounds even if the broader bias remains negative. Resistance around 180.00 is important for judging whether bearish momentum is fading; a recovery toward the 20-day average near 183.35 would represent a more meaningful reversal attempt.

The fundamental pressure is primarily yen-side rather than evidence of a fresh deterioration in euro-area conditions. A narrowing Japan–Europe rate differential should reduce the carry appeal of EUR/JPY, while a risk-off environment could provide an additional boost to the safe-haven yen. Conversely, stable risk sentiment, weak BoJ guidance, or signs that future hikes will be gradual could limit downside and support a rebound.

Trading implication:

near-term bias remains bearish below the 100-day SMA, but the trade is vulnerable to event-driven volatility because the BoJ hike is already heavily anticipated and momentum indicators are oversold. Traders should focus on the BoJ decision, Ueda’s guidance on the terminal rate and pace of normalization, Japanese inflation and wage data, EUR rates, and whether EUR/JPY can hold the 178.42–177.80 support zone.