EUR/JPY Climbs Near 185.30 as ECB Hawkish Bets Intensify

Traders' Opinions

Summary:

EUR/JPY rose for a third consecutive session on Wednesday, supported by expectations of an ECB interest rate hike, while the Japanese Yen remained under pressure despite stronger-than-expected inflation data that reinforced bets on future Bank of Japan tightening.

BUY EURJPY

EXP

TRADING

185.182

Entry Price

186.800

184.200

185.490 +0.376 +0.20%

0.0

Pips

Flat

184.200

Exit Price

185.182

Entry Price

186.800

The Euro extended gains against the Japanese Yen for a third straight session on Wednesday, with EUR/JPY trading near 185.30 during early European hours as investors increased bets that the European Central Bank will raise interest rates at its policy meeting this week.

Market participants widely expect the ECB to deliver a 25-basis-point rate increase, supported by recent hawkish messaging from policymakers. Expectations for higher Eurozone borrowing costs continued to underpin demand for the common currency, helping the Euro outperform the Yen.

“The ECB is widely expected to raise its key interest rates by 25 basis points in June, in line with its recent hawkish communication,” said Martin Wolburg, Senior Economist at Generali Investments.

The Japanese Yen, meanwhile, failed to draw significant support from stronger-than-expected inflation data. Japan’s Producer Price Index rose 6.3% year-over-year in May, accelerating from April’s revised 5.3% pace and exceeding market forecasts of 5.5%. The reading marked the fastest increase in wholesale prices in three years, driven largely by higher energy costs linked to ongoing Middle East tensions.

The stronger inflation figures have reinforced expectations that the Bank of Japan could continue normalizing monetary policy. Investors increasingly expect the central bank to raise interest rates at next week’s meeting, while speculation is also growing that additional rate hikes could follow later this year.

Attention now turns to Bank of Japan Governor Kazuo Ueda, whose comments will be closely watched for clues on the pace of future tightening. However, despite rising expectations for a more hawkish BoJ, traders remain focused on the ECB’s more immediate policy outlook, allowing the Euro to maintain the upper hand against the Yen.

EUR/JPY remains supported by near-term ECB tightening expectations, while markets are still waiting for stronger confirmation that the Bank of Japan is prepared to accelerate its policy normalization cycle. Until then, the interest-rate differential continues to favor the Euro.

Technical Analysis

EUR/JPY remains constructive on the 4-hour chart despite recent volatility. Price action has recovered sharply from the June selloff and is now consolidating above a key demand zone around 185.05–185.15, which previously acted as resistance before turning into support. The successful defense of this area suggests buyers remain active on dips and that the broader recovery structure remains intact.

The pair is currently trading near 185.20 and attempting to build momentum for another test of the major resistance zone between 186.15 and 186.22. This area has repeatedly capped upside advances in recent sessions, producing multiple rejections and establishing itself as the most important near-term technical barrier. A decisive break and 4-hour close above this resistance cluster would confirm a bullish continuation pattern and likely accelerate gains toward 186.50 initially, with scope for an extension toward the 186.80–187.00 region.

The recent rebound from the 184.25–184.35 support zone is particularly noteworthy. This area marked a significant demand region where buyers aggressively stepped in following the sharp decline, producing a strong bullish recovery and confirming that the underlying trend remains tilted to the upside. As long as EUR/JPY continues to hold above this support base, the broader bullish structure remains valid.

In the near term, the 185.05–185.15 zone represents the first line of defense for bulls. A sustained break below this area would weaken immediate upside momentum and expose the 184.30 support region once again. Failure to hold above 184.30 would constitute a more meaningful deterioration in market structure and could trigger a deeper correction toward the psychological 184.00 level. A move below that threshold would shift the technical outlook from bullish consolidation to a broader corrective phase.

From a price-action standpoint, the market appears to be forming a higher-low structure following the recent rebound, while the repeated tests of resistance indicate growing pressure on sellers. Such patterns often precede a breakout attempt, particularly when support levels continue to hold despite multiple retests.

Although momentum indicators are not displayed on the chart, recent price behavior suggests bullish momentum is stabilizing rather than fading. The strong rejection from sub-184.30 levels and subsequent recovery back above 185.00 indicate improving buying interest, while the current consolidation phase appears more consistent with accumulation than distribution.

Overall, the technical outlook remains cautiously bullish while prices hold above 185.05 support. A confirmed break above 186.20 would likely signal the next leg higher, whereas a failure to maintain support could result in a retest of lower demand zones before buyers attempt another advance.

TRADE RECOMMENDATION

BUY EUR/JPY

ENTRY PRICE: 185.20

STOP LOSS: 184.20

TAKE PROFIT: 186.80

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education