EUR/JPY has risen to approximately 161.10 during early trading on Friday, reflecting an increase of 0.45%. This rise is supported by a positive market sentiment and the currency pair remains above the key 100-period EMA, with the RSI indicating bullish momentum.
Resistance is found near 162.35, while support is at the 160.05-160.00 range. A significant drop could push the pair towards 159.75 and further to 159.35 if key support fails.
Japanese Yen Influence
The value of the Japanese Yen is influenced by Japan’s economic performance and the Bank of Japan’s policies, particularly its monetary stance. A gradual shift from an ultra-loose policy may strengthen the Yen.
Investor behaviour typically gravitates towards the Yen during market instability, highlighting its position as a safe-haven currency. The ongoing divergence in monetary policies between major central banks has led to fluctuations in bond yield differentials, impacting the Yen’s performance against the Euro and other currencies.
The increase to around 161.10 points to growing confidence among buyers, emphasised by a steady position above the 100-period EMA. The RSI’s current reading suggests that upward momentum is still intact, though it remains to be seen whether it will push through the nearby resistance level at 162.35. If that barrier holds firm, the possibility for price consolidation or a minor retreat exists.
On the downside, the price zone of 160.05-160.00 may act as the first line of defence. Should sellers exert more pressure and break below this area, moves towards 159.75 and even 159.35 could come into play. This presents a defined range where market participants can gauge whether sentiment tilts towards further strength or an extended pullback.
Monetary Policy Outlook
Monetary policy developments in Japan remain a key factor. While easing has been the long-standing norm, any indication of a gradual move away from that stance could increase demand for the Yen. With interest rate differentials playing a major role, traders should monitor updates from the Bank of Japan, as expectations for policy adjustments could spark shifts in positioning.
During times of uncertainty, the Japanese currency historically benefits from its safe-haven appeal. Its movement against the Euro also hinges on changes in global bond yields, which have been unpredictable due to contrasting central bank policy directions. Fluctuations in yield spreads are not just theoretical—they directly influence market movements, and in turn, decisions on whether to favour holding Yen or Euros.
With price levels clearly marked and external influences remaining at play, upcoming sessions may offer opportunities depending on how the key thresholds hold or break. Policymakers’ signals and broader risk sentiment will be monitored closely, as they can drive adjustments in strategy. Traders will need to remain attentive to both technical levels and fundamental shifts to navigate the changing conditions effectively.
