EURJPY Forming Bullish MomentumEUR/JPY is clearly showing a strong bullish phase, as price has broken above a key resistance area around 174–176 JPY and is now extending higher. That old supply zone has flipped into support, giving the euro a firm base to launch further gains. The chart structure suggests that EUR may have room to rally toward the 182–184 region if momentum continues to favor upside.
Fundamentally, the euro is benefitting from a clear divergence in central bank policy. The European Central Bank is likely staying more accommodative, while the Bank of Japan continues to tread carefully despite having raised rates to 0.5%. This divergence is pushing capital into euro-denominated assets and weakening the yen.Meanwhile, Japan’s import costs are under pressure due to the weak yen, which adds inflationary risk and could constrain BoJ’s flexibility.
On the rate-expectations front, markets are pricing in possible further BoJ tightening, but there remains uncertainty on timing. Some analysts argue that Japan’s real rates remain deeply negative once adjusted for inflation, which could limit how much upside the yen can recover in the near term. ( ) This raises a tension between nominal hikes and real-rate dynamics, making the yen’s path forward less straightforward.
