- EUR/JPY remains supported near recent highs as the yen weakens broadly
- Political uncertainty in Japan fuels concerns over fiscal expansion
- Weak demand at a government bond auction adds pressure to the yen
EUR/JPY continues to trade near elevated levels during European session trading, holding firm around the 184.40–184.70 region as renewed weakness in the Japanese yen offsets modest consolidation in the euro. The pair remains underpinned by a deteriorating yen backdrop, with political uncertainty and fragile bond market demand weighing on sentiment.
While upside momentum has slowed slightly, price action suggests consolidation rather than reversal, keeping the broader bullish structure intact.
Japanese Yen Weighed Down by Political and Bond Market Concerns
The Japanese yen has remained under pressure after sliding to fresh multi-month lows according to Reuters, as investors digest a mix of political uncertainty and fragile demand in Japan’s bond market. Speculation around potential early elections has added to concerns that fiscal policy could turn more expansionary, increasing government borrowing needs at a time when market appetite for Japanese debt appears cautious.
At the same time, sentiment indicators have softened. The latest Reuters Tankan survey pointed to a dip in manufacturer confidence at the start of the year, highlighting lingering concerns around domestic growth momentum. Together, these factors have limited any meaningful recovery in the yen, keeping it vulnerable against higher-yielding counterparts.
Euro Gains Support as ECB Rate-Cut Expectations Ease
On the euro side, sentiment remains relatively steady. Markets increasingly believe the European Central Bank is nearing the latter stages of its easing cycle, with limited appetite for aggressive near-term rate cuts given subdued but stabilising inflation dynamics.
This perception has helped the euro retain support, especially against currencies facing structural or political headwinds. As a result, EUR/JPY has remained resilient despite short-term pauses in upside momentum.
EUR/JPY Technical Outlook
From a technical perspective, the daily chart continues to point to a constructive bias:
- Price remains above the 100-day EMA, preserving the broader uptrend
- Bollinger Bands show mild contraction, consistent with consolidation
- Momentum indicators remain supportive, with RSI holding above neutral
Key levels to watch:
- Support: 184.00, followed by 182.80
- Resistance: 185.20, then 186.00
EUR/JPY daily price chart Created on TradingView on Jan 15 2026
A sustained break above 185.20 would reinforce bullish continuation. Conversely, a close below 184.00 could open room for a deeper pullback, though such a move would still be viewed as corrective unless key trend support gives way.
EUR/JPY Outlook
In the near term, EUR/JPY is likely to remain supported as long as yen sentiment stays fragile and political and bond market risks persist in Japan. While consolidation may continue, the broader bias remains tilted to the upside unless a meaningful shift in risk perception or policy expectations emerges.
Writer’s Trade Idea My preferred strategy remains buying pullbacks toward 184.00, targeting a move toward 185.80, while placing a stop-loss below 182.80.
EUR/JPY is holding near recent highs due to sustained weakness in the Japanese yen, driven by political uncertainty in Japan and soft demand for government bonds, while the euro remains supported by a more stable ECB policy outlook.
Political risks, such as speculation around snap elections and potential fiscal expansion, tend to weaken the yen by raising concerns over increased debt issuance and looser fiscal discipline, which can reduce investor confidence in the currency.
Key support is located near 184.00, followed by 182.80 if selling pressure increases. On the upside, resistance is seen around 185.20 and 186.00, with a break above these levels signalling potential bullish continuation.