EUR/JPY Forecast: 185.06 Holds as BoJ Hike Bets Build
- EUR/JPY trades at 185.06, up 0.24% on the day and back within a point of the late-July high.
- Divergent policy is the driver: the ECB is parked at 2.25% while the BoJ is being pushed towards a September move.
- The 184.12-184.63 moving-average band decides whether this grind higher extends or fails.
Fundamental Analysis: EUR/JPY
The euro leg of this cross is the quiet one. Euro area annual inflation was confirmed at 2.9% for July in Eurostat's 19 August release, up from 2.8% in June and still above the ECB's target, yet the deposit rate has sat at 2.25% for months. Inflation drifting up while policy stands still leaves the euro supported but without a fresh catalyst.
The yen is where the pressure sits. The Bank of Japan lifted its policy rate to 1.00% on 16 June, the highest since 1995, then held in July while signalling more to come. Markets now price roughly 19 basis points of tightening by September, and the Takaichi government is reported to favour a move in September or October. Japan's own inflation, 1.7% in June with core at 1.6%, is still below target, which remains the doves' argument.
That balance explains the shape of the chart rather than a direction. A cross that has recovered close to six yen from its early-August low is not positioned for an imminent BoJ shock, but nor is it ignoring one. Until September resolves the question, EUR/JPY trades the gap between a central bank that has stopped moving and one that has started.
Technical Analysis: EUR/JPY
The move defining the current structure is the drop on 3-4 August, which took the cross from roughly 186.40 to 179.60 in two sessions. Everything since has been repair work: higher lows through mid-August, and a tight moving-average cluster at 184.12, 184.20, 184.36 and 184.63 that price has held above for a week.
Resistance sits at 185.50 first, then the 186.40 swing high that capped the pair before the drop. Support is the moving-average band from 184.63 down to 184.12, with 183.00 the next shelf beneath it. A four-hour close under 184.10 would put the entire August recovery in question.
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