EUR/JPY trades near 176.50, pressured by a descending channel and structural outflows, with technicals signaling further downside toward the 175.07 support level.
The cross has fallen for a second straight day to around 176.50-176.80, sitting below both the nine-day (176.91) and 50-day (178.59) EMAs inside a descending channel. With the 14-day RSI at 45.73 and MUFG citing persistent structural outflows weighing on the yen, downside targets at 175.07 (October 30 low) and 174.00 look more likely than a rebound, though the pair is not oversold and any move above 178.59 would flip the setup bullish.
The first support is the 12-month low of 175.07 hit on October 30, then the lower boundary of the descending channel around 174.00. A break below the channel opens the way toward the 15-month low at 169.72.
A successful break above the 50-day EMA at 178.59, the upper boundary of the descending channel, would signal a bullish reversal and could send the cross back toward the all-time high of 187.95.
The euro was the weakest currency against the yen on the day, and MUFG/BTMU's note that structural portfolio and FDI outflows pressuring the yen 'could well be slow to change' is tempered by the yen's recent firmness near multi-month highs against EUR (12-month low for the cross at 175.07 on October 30). The yen's behaviour remains supported by these flows unwinding slowly, though July/early-August intervention shows officials can act.
The euro weakened against the yen for a second day, and analysts at MUFG/BTMU note persistent structural flows, though they also say portfolio and FDI outflows continue to weigh on yen performance and could be slow to change.
The EUR/JPY cross has extended its losses for a second consecutive day, trading near 176.50 as it remains trapped within a descending channel. Technical indicators, including the 14-day RSI at 45.73 and the pair's position below the nine-day and 50-day EMAs, suggest a persistent bearish bias. Analysts at MUFG note that structural portfolio and FDI outflows continue to weigh on the yen, despite recent market distortions from official intervention.
The first support is the 12-month low of 175.07 hit on October 30, then the lower boundary of the descending channel around 174.00. A break below the channel opens the way toward the 15-month low at 169.72.
A successful break above the 50-day EMA at 178.59, the upper boundary of the descending channel, would signal a bullish reversal and could send the cross back toward the all-time high of 187.95.