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The EUR/JPY cross trades in negative territory near 178.50 during the early European trading hours on Wednesday. The Japanese Yen (JPY) edges higher against the Euro (EUR) as a slew of hawkish comments from the Bank of Japan (BoJ) policymakers have cemented views that the BoJ will raise interest rates this month.  

BoJ board member Hajime Takata said last week that the central bank could take a more aggressive approach than expected. Takata further stated that a 25-basis-point hike “is not necessarily set in stone,” and that generally speaking, back-to-back rate hikes would be a possibility, too.

The BoJ is set to raise its policy rate to 1.25% from the current 1.0% at its September policy meeting, signaling an acceleration in the pace of rate hikes. This would raise the interest rate to its highest level in about 31 years and follow a rate hike in June. 

Yen funding role questioned as rising JGB yields unsettle cross-border flowsStrategists at Rabobank argue that the “clear problem relates to the use of the JPY as a funding currency,” with markets now asking “whether there is room for the recent rapid unwind of JPY shorts to accelerate nearterm.” They add that an “appreciating JPY would bring fresh uncertainly over whether domestic Japanese investors would have less incentive to look for opportunity abroad,” a debate that has been sharpened by the rise in JGB yields, which has “already made this a topical theme.” Rabobank also notes that “the market has suspected that the US Treasury has been worried about large Japanese insurers potentially selling US government debt for JGBs for some time,” underscoring how shifts in Japan’s rate environment could reverberate through global fixed income positioning.

Technical Analysis: EUR/JPY keeps a bearish vibe amid oversold RSIIn the daily chart, EUR/JPY extends its corrective slide and holding decisively below key moving averages, which keeps the near-term bias firmly bearish. Price is lodged beneath the 20-day simple moving average (the middle Bollinger band) and the 100-day simple moving average, underscoring a market that remains capped by medium-term trend resistance. The Relative Strength Index (14) has dropped to around 22, deep in oversold territory, hinting that while downside pressure persists, the selloff could be at risk of fatigue if sellers fail to press decisively lower.

On the topside, initial resistance is seen at the lower Bollinger band near 179.00, with a recovery above this barrier needed to ease immediate selling pressure. Further up, the next hurdle is located at the 180.00 psychological level, en route to the Bollinger mid-line at 183.82 and the 100-day SMA at 184.70.

On the flip side, the November 10, 2025 low of 177.17 acts as an initial suppot level for the cross. Any follow-through selling below this level could pave the way to the November 4, 2025 low of 176.09, followed by the October 21 low, 2025 of 175.35.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Japanese Yen FAQs The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

USDJPY edged higher from new lowest level in almost three months, following three-day sharp fall on coordinated intervention by Japan’s authorities and US central bank, to support weakening yen.

Massive intervention buying lifted yen against US dollar (nearly 5%) and Euro (4.2%), with yen’s weekly gains of 3.9% vs dollar and 3.1% vs Euro.

The authorities signaled that further intervention cannot be ruled out that keeps near-term focus at the downside, with current (still mild) bounce, seen as positioning for fresh push lower for both currency pairs (USDJPY and EURJPY).

The USDJPY surged through daily Ichimoku cloud (spanned between 160.67 and 158.48), broke through 200DMA (157.92) and trendline support (157.10), while EURJPY broke 200DMA support (183.62), to hit the lowest since 17 Nov 2025 (179.36) on Monday.

Technical picture on daily chart turned bearish for both pairs, but stretched indicators after sharp fall suggest that bears may take a breather, though with limited upticks, due to persisting risk for possible further intervention.

USDJPY – broken 200DMA turned to solid resistance which capped today’s action and should ideally limit upticks, guarding next significant barrier at 158.48, provided by the base of thick daily cloud.

Fresh bears eye next pivotal supports at 155.02/154.78 (May 6 low / Fibo 38.2% of 139.88/163.98 rally) break of which to generate stronger reversal signal and support scenario of direction change of 16-month uptrend.

EURJPY- upticks should ideally hold below 182.50 zone (Fibo 38.2% of 187.43/179.36 post-intervention fall) to keep bears intact for firm break through cracked 180 psychological support and acceleration towards 175.28 (Fibo 38.2% of 154.79/187.94) and 172.70 (100WMA) in extension.

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The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.

EUR/JPY plunges on Thursday, down 2.54% on the day to trade around 182.60 at the time of writing, after a sudden surge in the Japanese Yen (JPY) triggered by what appears to be another intervention by Japanese authorities in the foreign exchange market. The move has been particularly violent, with the pair losing more than 400 pips in just a few minutes.

The JPY rally comes without any obvious economic catalyst, reinforcing speculation that the Japanese Ministry of Finance has stepped into the market to curb the currency's persistent weakness. USD/JPY is also tumbling below the 161.00 mark, while other major Japanese Yen crosses are posting broad-based losses.

The suspected intervention recalls the episode at the end of April, when the Japanese Yen appreciated by nearly 3% against the US Dollar after USD/JPY reached a high of 160.72. At that time, the Japanese Finance Minister Katayama Satsuki warned that "decisive" action was imminent, while top currency diplomat Atsushi Mimura described it as the market's "final warning." Two sources familiar with the matter later told Reuters that Japanese authorities had intervened to support the currency. Since then, the Finance Minister has continued to warn that further intervention remains possible as the Japanese Yen has continued to weaken.

Market attention now shifts to the Bank of Japan (BoJ) policy decision on Friday. The central bank is widely expected to leave its policy rate unchanged at 1%, but investors will closely watch the updated economic projections and Governor Kazuo Ueda's comments for clues on whether another rate hike could come as early as October or be delayed until December. A more hawkish message could extend the Japanese Yen's rebound and keep pressure on JPY crosses.

On the European side, the latest economic data has offered only limited support to the Euro (EUR). Preliminary figures showed that Germany's Gross Domestic Product (GDP) expanded by 0.2% QoQ in the second quarter, beating expectations of 0.1%, while annual growth accelerated to 0.9%.

Across the Eurozone, the economy expanded by 0.4% in the second quarter and 1% YoY, also exceeding market forecasts. Meanwhile, the European Commission reported an improvement in July Consumer Confidence and Economic Sentiment, although the Unemployment Rate edged up to 6.3%.

Japanese Yen Price Today The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHFUSD-0.56%-0.53%-2.58%-0.28%-0.91%-1.33%-1.12%EUR0.56%0.02%-2.00%0.34%-0.37%-0.79%-0.53%GBP0.53%-0.02%-2.01%0.30%-0.38%-0.79%-0.53%JPY2.58%2.00%2.01%2.37%1.73%1.29%1.57%CAD0.28%-0.34%-0.30%-2.37%-0.62%-1.05%-0.78%AUD0.91%0.37%0.38%-1.73%0.62%-0.41%-0.17%NZD1.33%0.79%0.79%-1.29%1.05%0.41%0.29%CHF1.12%0.53%0.53%-1.57%0.78%0.17%-0.29% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

Key Points:Rising producer prices, import costs and bond yields keep another BOJ rate hike in focus.USDJPY remains bullish above 160.30, with a break above 163.70 opening the door toward 175.GBPJPY may target 220, while EURJPY could extend toward 190.50 if key support levels hold.

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The interest rate outlook for Japan remains uncertain as inflationary pressure continues to build. The producer prices are rising, import costs remain high and government bond yields have moved to multi-decade highs. These trends support the case for another Bank of Japan (BOJ) rate hike later this year. But the BOJ may still wait for stronger wage growth and increase in consumer inflation. This leaves the yen sensitive to policy signals, while USDJPY, GBPJPY and EURJPY remain technically strong.

BOJ Rate Hike Outlook Strengthens as Japan Inflation Rises Japan’s producer price index (PPI) increased by 7.1% YoY in June. This beat the market expectation of 6.8% and exceeded the upwardly revised 6.6% gain in May. The increase indicates that businesses are passing their increased input costs to customers faster than in the past. The trend could increase the consumer inflation and lead the BOJ to tighten again.

According to the data, the fuel prices increased by 22.8% while non-ferrous metal prices jumped by 39.2%. Energy prices were pushed up by the Middle East conflict while the AI material demand has lifted the metal prices. These pressures may remain high if tensions continue and supply conditions remain tight. This suggests that the BOJ may hike the interest rate in October.

A low yen is putting on a new layer of inflation. The import prices continued to rise as weak yen and higher energy costs raised the cost of imported goods. The chart below shows that Japan’s imports increased 12.5% to JPY 9,890.2 billion in May 2026. Now the BOJ must decide whether the higher import prices will spread into wages and consumer prices or remain at the wholesale level.

Japan Bond Yields Hit Multi-Decade Highs on Inflation Fears Japanese government bond yields are also pointing toward a higher interest rate environment. The 10-year JGB bond yield rose to a 2.90%, the highest rate since September 1996. It rose during nine consecutive sessions since 26 June, in response to rising oil prices, higher inflation and concerns about Japan’s fiscal health.

The strong drop in yields on Friday does not change the bullish trend. Rising yields suggest that the bond investors want greater compensation for the long term inflation risks.

The long term bond yields have increased with bigger momentum. The 20-year yield rose to 3.89%, while the 30-year yield reached 4.03%. The 40-year yield advanced to 4.055%. These moves indicate that investors are worried about the big government spending plans and that the policy may stay too loose and inflation will continue to rise.

But the shorter end of the yield curve is sending a more cautious signal. The 2-year yield reached to 1.445% and the 5-year yield reached to 1.99%. The yield gap between the 10-year and 2-year yields has increased significantly as seen in the chart below.

The steepening reflects a greater sense of inflation risk in the long end, and less confidence that the BOJ will hike soon. This suggests that BOJ may wait for stronger consumer prices and wages to increase its policy rate from 1% to 1.25%.

USDJPY Forecast: BOJ Rate Hike Risk Challenges Dollar Strength US–Japan Yield Gap Narrows as Japanese Yields Rise The interest rate outlook creates mixed environment for USDJPY. The yen should find support with higher Japanese yields and the prospect of another BOJ rate hike. A more hawkish BOJ could reduce the yield gap between Japan and the U.S. This would detract from any yen funded carry trades and may potentially lead to a lower USDJPY.

The chart below shows that the Japanese yields have increased much faster since 2022. But the U.S. yields have remained relatively high. As a result, the yield gap between the two countries has narrowed. This trend reduces the interest rate advantage of holding dollars over the yen. This may provide support for the Japanese currency. But the U.S. yields remain higher so the dollar still retains an important yield advantage.

But the low yen value still plays a crucial role in Japan’s inflation issues. As energy import prices go up, the demand for foreign currencies and the pressure on the yen increase. This might keep USDJPY high until the BOJ gives more clear indication of what it will do next. Any delay of the next rate hike would be positive for USDJPY while guidance of an October increase could trigger an import yen recovery.

USDJPY Break Above 163.70 Opens the Door to 175 From technical perspective, USDJPY is consolidating at the pivotal area of 160 to 162. The price is compressing within this region before an upside breakout. A break above this zone would likely open the door for strong surge in USDJPY toward the 175 target. This target is defined by the ascending channel pattern that extends from the 2023 lows.

The consolidation around this important region is also visible on the short term 4-hour chart. It shows that the pair is now consolidating between 160.30 and 163.70. The range is widening and prices are compressing within an ascending broadening wedge pattern. A break above 163.70 would indicate a stronger rally in USDJPY toward 166. But 160.30 remains strong support in the short term. Any correction is considered a buying opportunity for traders to push the pair higher.

GBPJPY Forecast: 218 Breakout Opens the Door to 220 Higher Japan rate expectations may also put pressure on GBPJPY. The very large interest rate differential between the United Kingdom and Japan has been good for the pound. But this advantage may weaken if the BOJ hikes the rates again to 1.25%. The higher Japanese bond yields could encourage investors to reduce carry trades and move capital back to yen.

But the pair may still be supported if Bank of England maintains higher rates or takes a conservative approach to rate cuts. Thus, GBPJPY will be reliant on both central banks’ relative directionality. The most bearish risk would be a hawkish BOJ and a softer Bank of England outlook.

GBPJPY also shows strong positive price action. This positive price action is reflected in the formation of inverted head and shoulders pattern from January 2026 to April 2026.

This bullish consolidation pattern broke higher in April 2026. After the breakout, the pair continued to rally on the strength of the pound and the weakness of the Japanese yen. The pair has already broken 216.30 and is now dropping back toward support to attract buyers. The 215.60 to 216.30 area remains strong support. A break above the 218 level would likely push the pair to further highs.

EURJPY Forecast: Bullish Trend Targets 190.50 Eurozone rate expectations are not that aggressive. Therefore, EURJPY could be more responsive to BOJ communication. If the European Central Bank pivots towards easier policy ahead of the BOJ’s next rate increase, the interest rate spread between Europe and Japan will narrow. This would provide support for the yen and increase the risk of a drop in EURJPY.

The outlook also depends on the global risk sentiments. The escalation in the conflict in the Middle East would drive up energy costs for Japan and Europe. But imported fuel needs could exert pressure on the yen in the near term for Japan. The EURJPY could hold steady ahead of the BOJ. But a clear sign that the bank will hike rates in October or at year’s end could generate a deeper pullback.

EURJPY also remains strong and is consolidating within rising trend lines. The immediate support remains at 183.50. The pair is also supported by the 200-day SMA at 182.80. If EURJPY continues higher, the immediate target remains 190.50. As long as the 180 level holds in EURJPY, the next move in the pair will likely be higher. The 50-day and 200-day SMAs are rising which indicates that any correction may attract new buyers.

Final Words The interest rate outlook in Japan remains tilted towards further tightening. The producer prices are high, import costs are increasing and bond yields are rising. These factors suggest another BOJ rate hike. But the central bank might still wait for the clear signals from wages and consumer inflation. A rate hike from 1% to 1.25% could be on the cards later this year if energy prices remain elevated and the yen remains weak.

If BOJ hints at a rate hike in October or at the end of the year, the yen could get some support. But the technical picture of USDJPY, GBPJPY and EURJPY remains bullish. A break above 163.70 in USDJPY would open the door for a rally to 175. GBPJPY might push higher towards 220 and EURJPY could head to 190.50.

Read more: Weak Jobs Data Hits Fed Hike Odds as Dollar Tests Support

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Muhammad Umair is a finance MBA and engineering PhD. As a seasoned financial analyst specializing in currencies and precious metals, he combines his multidisciplinary academic background to deliver a data-driven, contrarian perspective. As founder of Gold Predictors, he leads a team providing advanced market analytics, quantitative research, and refined precious metals trading strategies.

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