EUR/JPY Slides to 179.10 Amid BoJ Hike Expectations
The euro-yen pair drops to 179.10 as the Bank of Japan prepares a rate hike to 1.25%.
EUR/JPY trades at 179.10 in early Friday European sessions. The pair sits in negative territory against the yen. This level is below the 100-day simple moving average. The bearish bias remains intact for the near term. Market participants focus on upcoming central bank decisions.
The Bank of Japan is expected to raise rates by 25 basis points. This move would lift the policy rate to 1.25%. The decision is scheduled for the September 17-18 meeting. A hike to this level marks a 31-year high for the policy rate. Analysts polled by Reuters confirm this consensus view.
BoJ Policy Signals Support Yen
Reuters projects the BoJ rate to reach 1.5% by March 2027. The target for Q2 2027 is 1.75%. Governor Kazuo Ueda will address the pace of future hikes. Traders monitor his press conference for guidance on the tightening cycle. Any hints of faster action would strengthen the yen further.
Board member Kazuyuki Masu advocates for further rate increases. He argues the current 1.00% rate is below the neutral range. The neutral range is estimated between 1.10% and 2.50%. Brown Brothers Harriman notes markets have priced in the 25bps hike. They add that a 50bps move is possible if inflation stays near the 2% target.
Technical Levels Define Current Range
The pair trades below the 20-day Bollinger simple moving average. It also stays under the 100-day SMA. Spot price slides along the lower half of the Bollinger envelope. The lower band acts as the nearest volatility floor. The 14-period Relative Strength Index reads 28.
This RSI reading indicates oversold conditions. Such conditions may slow downside pressure. They do not yet signal a reversal. Initial resistance appears at the 180.00 psychological level. The next hurdle is the 20-day Bollinger SMA near 183.35.
Support and Resistance Points
The 100-day SMA sits at 184.55. The Bollinger upper band caps upside at 188.90. Support begins at the September 10 low of 178.42. The Bollinger lower band provides support around 177.80. A break below this level exposes the November 5 low.
The November 5 low stands at 175.70. This level represents the next major downside target. The technical setup remains negative under the moving averages. Source data from GN markets/policy (en-US) supports this outlook. Traders watch for confirmation of the bearish trend.
