EUR/JPY. Analysis and Forecast

[Ben Graham]

Today, the EUR/JPY pair continues to decline despite an improvement in industrial activity in the eurozone. According to Eurostat, industrial production rose by 0.7% month on month in November, exceeding market forecasts, while year-on-year growth reached 2.5%. These figures point to stabilization in the manufacturing sector, easing downward pressure on the euro. In addition, eurozone data released today, Friday, confirmed that Germany's year-on-year consumer inflation in December fell to the European Central Bank's target level of 2%. As a result, there is speculation that the ECB is nearing the end of its monetary easing cycle, with a possible rate cut toward the end of 2026 amid moderate inflation.

The Japanese yen is finding support from rising risks of foreign exchange market intervention. Japanese authorities continue to warn about unacceptable market volatility, as elevated levels in several yen currency pairs attract investor attention. The finance minister has emphasized readiness to take any measures necessary to counter excessive fluctuations. This stance is curbing yen sell-offs, even though the currency remains under pressure from expectations of loose fiscal and monetary policy.

Japan's political landscape is adding to uncertainty. Talk of snap elections and anti-crisis fiscal stimulus measures is fueling expectations of looser fiscal policy. This limits the potential for a sustained recovery in the Japanese yen, despite periodic demand for safe-haven assets.

As a result, EUR/JPY remains sensitive to macroeconomic data and central bank signals. Solid eurozone data provide underlying support for the euro, while intervention risks and political developments in Japan continue to shape yen dynamics.

From a technical perspective, the pair has stalled near the 183.50 level. If prices fail to hold this level, the pair could accelerate its decline toward the round 183.00 level. If the level is held, the nearest intraday resistance is seen at 184.15. Since oscillators on the daily chart remain positive, bulls are not ready to give up.

The table below shows the percentage change of the euro against the major currencies today. The euro showed its strongest performance against the U.S. dollar.

The material has been provided by InstaForex Company - www.instaforex.com