EUR/JPY faces a bearish outlook as it trades below the 100-day SMA at 181.50, with hawkish Bank of Japan policy expectations and the Yen's status as a safe-haven hedge against AI volatility capping gains.
The cross trades near 176.65 on Monday but sits below the 100-day SMA at 181.50 with an RSI of 44.39, keeping a bearish near-term tone. Hawkish BoJ signals, including September meeting minutes released Thursday showing most policymakers back further hikes and an expected December rate hike, strengthen the Yen and cap the pair. Support lies at 175.70, with a break opening 174.74.
BoJ September minutes released Thursday showed most policymakers see further rate hikes as appropriate as inflation nears the 2% target, and a December hike is expected, with the former top economist seeing rates rising toward 2% next year. OCBC also flags the Yen as the standout hedge against US AI volatility and cites possible GPIF flows home as an additional tailwind. Counterpoints are that sustained JPY gains on AI concerns may be premature and GPIF flow shifts remain unconfirmed.
The EUR/JPY cross trades at 176.65 on Monday, but remains under pressure as it holds below the 100-day SMA of 181.50. Hawkish signals from the Bank of Japan, including expectations for a December rate hike, continue to support the Yen. Analysts at OCBC also highlight the Yen's role as a hedge against US-centric AI volatility, further limiting the pair's upside potential.
The cross is trading below its 100-day SMA at 181.50, and hawkish Bank of Japan signals, including expectations of a December rate hike, are supporting the Yen against the Euro.
Resistance sits at 176.80, then 178.30 and 180.00, with the 100-day SMA at 181.50 above. Support is at 175.70 and 175.30, and a decisive break below could target the October 6, 2025 low of 174.74.
Hawkish Bank of Japan signals point to a December rate hike, and analysts see the Yen as a hedge against US-centric AI market volatility, with potential repatriation of Japanese pension flows as an extra support.
Analysts note it is probably too early for sustained Yen gains purely on AI concerns, and the GPIF shift toward domestic assets is only a potential catalyst that has not yet been confirmed.