Bullish Impulse Poised for Resumption as EUR/JPY Establishes Higher Structural Support

Central Bank

Economic

Summary:

The formation of progressively higher structural support levels strongly indicates that the broader bullish trend may be preparing to reclaim control of aggregate price action.

BUY EURJPY

EXP

TRADING

184.633

Entry Price

186.340

183.500

184.412 -0.207 -0.11%

0.0

Pips

Flat

183.500

Exit Price

184.633

Entry Price

186.340

The Japanese Yen (JPY) continues to navigate an environment of sustained pressure, heavily weighed down by mounting corporate and investor anxieties regarding the broader economic fallout of the ongoing conflict in the Middle East. Despite this prevailing bearish undertone, the persistent threat of direct market intervention by Japanese financial authorities to support the domestic currency is acting as a major psychological constraint, effectively limiting market participants from opening aggressively leveraged short positions against the Yen. Market focus is simultaneously shifting toward the upcoming release of Japan's preliminary Gross Domestic Product (GDP) print for the first quarter, scheduled for later Tuesday. Present consensus forecasts point to a 0.4% quarterly expansion, arriving slightly ahead of the 0.3% rate recorded in the prior quarter.

On an annualized basis, Japan's quarterly economic growth is projected to maintain a solid trajectory around 1.8%, representing a notable acceleration from the previous 1.3% print. This economic resilience has been largely anchored by stable export performance and an expansion in industrial production throughout the first quarter—a cyclical boom heavily propelled by the global artificial intelligence supercycle and a corresponding surge in semiconductor exports. However, this positive economic backdrop was rapidly overshadowed overnight, as selling pressure on both the Yen and Japanese Government Bonds (JGBs) intensified following reports that Prime Minister Sanae Takaichi requested the Ministry of Finance to draft a comprehensive supplementary budget. This upcoming fiscal expansion will likely necessitate a fresh round of government bond issuance, adding structural supply to fixed-income markets. According to a government official cited by Reuters, this additional capital allocation is primarily designed to fund emergency relief measures rather than an aggressive economic stimulus program, a distinction that has nevertheless heightened market expectations of an impending influx of government debt supply.

Concurrently, the Eurozone economic calendar remained remarkably sparse, leaving market participants to digest a series of coordinated public appearances by high-ranking European Central Bank (ECB) officials. Governing Council member Robert Holzmann indicated that an interest rate hike during the upcoming June assembly remains a distinct possibility, provided there is no discernible de-escalation in the ongoing geopolitical conflict involving Iran. Echoing this hawkish baseline, Bundesbank President Joachim Nagel asserted that the central bank is increasingly drifting away from its baseline macroeconomic scenario, noting that policymakers may be compelled to take decisive action as early as June. Similarly, Governor of the Banque de France François Villeroy de Galhau affirmed that the central bank stands prepared to adjust its policy levers as conditions dictate, warning that the Middle Eastern crisis has introduced asymmetric risks to both regional growth trajectories and headline inflation expectations.

Further solidifying this hawkish alignment, Boris Vujcic stated on Friday that the definitive decision to raise interest rates during the June assembly remains strictly contingent upon forthcoming data streams. These comments suggest a growing institutional alignment toward imminent tightening to curb persistent Eurozone inflation expectations. Indeed, a recent Reuters poll revealed that 85% of economists now expect the central bank to implement a 25-basis-point hike to the deposit rate, bringing it to 2.25% in June—a massive upward shift from the narrow majority that anticipated such a move prior to the April policy meeting. This sentiment was amplified at the commencement of the G7 Summit by ECB President Christine Lagarde, who acknowledged her profound concern regarding the aggressive fixed-income sell-off currently hammering global bond markets. Lending additional support to the tightening narrative, Yannis Stournaras noted over the weekend that a modest increase in borrowing costs could effectively anchor inflationary expectations without inflicting systemic economic damage. Bullish Impulse Poised for Resumption as EUR/JPY Establishes Higher Structural Support_1

Bullish Impulse Poised for Resumption as EUR/JPY Establishes Higher Structural Support_1

Technical Analysis

From a technical perspective, EUR/JPY has demonstrated notable resilience, continuously failing to validate a downside breach of the local horizontal support floor established at the 184.20 handle. Crucially, the formation of progressively higher structural support levels strongly indicates that the broader bullish trend may be preparing to reclaim control of aggregate price action.

To validate this budding structural turnaround, buyers must achieve a clean closing break above the 100 and 200-period Moving Averages, which are currently tracking just above the market at 184.88 and 185.58, respectively. A decisive daily close above this moving average cluster would likely trigger a wave of momentum buying, accelerating the pair toward the primary local resistance ceiling situated at 186.34.

Our analysis of momentum oscillators further supports this constructive, ascending technical profile. The Relative Strength Index (RSI) is currently tracking at the 46 level, recovering steadily after a minor technical retracement to the 36 level, which approached oversold boundaries despite relatively compressed intraday price movement. This rapid oscillator reset suggests that buyers are actively absorbing supply at higher average thresholds, setting a firm foundation for a fresh upward leg.

Simultaneously, the MACD continues to print a bearish histogram, but the bars are conspicuously lacking in structural depth and show clear signs of exhaustion. Given that the signal lines remain comfortably positioned above the neutral threshold, a positive histogram transition would easily deliver the necessary technical confirmation to spark a forceful bullish expansion. Conversely, traders must remain cautious, as a decisive daily close beneath the 184.20 support floor would completely invalidate the upside setup, opening the floodgates for an extended bearish move toward lower structural targets.

Trading Recommendations

Trading direction: Buy

Entry price: 184.63

Target price: 186.34

Stop loss: 183.50

Validity: May 29, 2026 15:00:00

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Bullish Impulse Poised for Resumption as EUR/JPY Establishes Higher Structural Support

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