EUR/JPY Rises Ahead of Fresh ECB Commentary

Traders' Opinions

Summary:

EUR/JPY advanced on Monday as the Euro benefited from growing expectations of another European Central Bank rate hike, while the Japanese Yen lagged despite persistent expectations that the Bank of Japan will maintain a gradual path toward policy normalization.

BUY EURJPY

EXP

TRADING

185.249

Entry Price

189.800

184.200

184.980 +0.429 +0.23%

0.0

Pips

Flat

184.200

Exit Price

185.249

Entry Price

189.800

The Euro strengthened against the Japanese Yen on Monday, with EUR/JPY climbing toward the 185.25 area as investors increased bets that the European Central Bank could deliver another interest rate hike later this year. The move came despite expectations that Japan's inflation will remain above the Bank of Japan's 2% target, a backdrop that would normally support the Yen.

Recent reports suggest the Bank of Japan may revise its economic growth forecasts higher in its July outlook while continuing to warn that inflation risks remain tilted to the upside. Although this reinforces expectations for a gradual normalization of Japanese monetary policy, the Yen struggled to capitalize as investors focused on the stronger policy outlook in Europe.

The Euro found additional support from renewed inflation concerns after tensions between the United States and Iran intensified again, pushing energy prices higher. With the Strait of Hormuz once again facing disruption, markets are increasingly concerned that elevated oil prices could keep inflation pressures persistent, strengthening the case for another ECB rate increase.

Analysts at MUFG continue to expect the ECB to raise interest rates by 25 basis points in September, while investors now await fresh comments from ECB policymakers for further guidance on the inflation outlook. In my view, EUR/JPY is likely to remain supported as long as expectations for tighter ECB policy continue to outweigh the Bank of Japan's gradual approach to monetary normalization.

Technical Analysis

EUR/JPY continues to respect a broad ascending channel on the daily chart, suggesting the longer-term trend remains tilted to the upside despite recent bouts of volatility. Price is currently trading around 185.30, holding comfortably above channel support while consolidating beneath a key resistance band that has repeatedly rejected bullish advances over the past several weeks.

The recent pullback found buyers near the 184.40–184.60 support area, which aligns with both the lower trendline of the ascending channel and a previous horizontal resistance level that has now turned into support. The swift recovery from this zone indicates that buyers remain active on dips and continue to defend the broader uptrend.

Attention now shifts to the 186.20 resistance level, a ceiling that has capped multiple rallies since late January. A decisive daily close above this barrier would represent a significant technical breakout, confirming fresh bullish momentum and exposing the 187.80 region as the next upside objective. If buying pressure remains strong, the rally could eventually extend toward the upper boundary of the ascending channel near 189.50–190.00.

On the other hand, failure to maintain support above 184.50 would weaken the current recovery and increase the likelihood of a deeper correction. Initial downside targets would emerge around 182.60, followed by the stronger support zone near 181.00, where previous buying interest has consistently returned. A sustained move beneath that region would be the first meaningful indication that the broader bullish trend is beginning to lose momentum.

Although the pair remains trapped between support and resistance, the overall technical picture continues to favor buyers. The series of higher swing lows remains intact, and price continues to trade within the boundaries of the long-term ascending channel, indicating that the prevailing trend has yet to be challenged. Bulls, however, still require a confirmed breakout above 186.20 before a stronger directional move can unfold.

TRADE RECOMMENDATION

BUY EUR/JPY

ENTRY PRICE: 185.25

STOP LOSS: 184.20

TAKE PROFIT : 189.80

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