• EUR/JPY gains ground to around 185.20 in Wednesday’s early European session.
• Likelihood of hawkish stance hikes from the ECB supports the Euro.
• The cross keeps the bullish vibe, but consolidation cannot be ruled out in near term with neutral RSI momentum.
• The first upside barrier emerges at 186.05; the initial support level is located at 185.15.

The EUR/JPY cross gathers strength to near 185.20 during the early European session on Wednesday. The Euro (EUR) edges higher against the Japanese Yen (JPY) amid expectations that the European Central Bank (ECB) would raise rates at its June policy meeting on Thursday.

The ECB is set to raise its key interest rate for the first time in almost three years on Thursday, becoming the first of its peers to tighten policy in response to a jump in energy prices caused by the conflict in the Middle East. While money markets are already pricing in a second 25 basis points (bps) hike for September, economists expect the ECB to maintain a “gently hawkish” but highly data-dependent tone without pre-committing to a fixed path.

“Lagarde may provide some indication of the ECB’s next move after she muddled communication on the rate outlook in March. We expect her to be clearer than in the past that a second hike may be in the pipeline,” said Simona Delle Chiaie, chief euro-area economist at Bloomberg. Any hawkish comments from ECB policymakers could lift the EUR against the JPY in the near term.

Technical Analysis:

In the daily chart, EUR/JPY holds a constructive near-term bias as it consolidates just above the Bollinger middle band and remains comfortably over the 100-day simple moving average, suggesting underlying demand on dips. The Relative Strength Index (14) at 49.99 is effectively neutral, hinting at a pause rather than exhaustion after the recent grind higher.

On the topside, the immediate hurdle is the Bollinger upper band near 186.05, where fresh selling interest could emerge. The next hurdle is seen at the February 9 high of 186.24, en route to the January 23 high of 186.88. On the downside, initial support is seen at the Bollinger middle band around 185.15, ahead of the 100-day SMA at 184.50, while a deeper pullback towards the lower Bollinger band near 184.25 would be expected to attract buyers as long as the broader bullish structure is preserved.

Octalas AI

Profit

Everyone's racing to cut costs. We're racing to create profit.

Start Selling through Service

Start Trial

Free for 14 days · No credit card required