EUR/JPY rose after falling by nearly 0.5% in the previous session, trading near 186.80 during Asian hours on Monday. The daily chart shows price action moving higher inside an ascending channel.
The cross remains above the nine- and 50-period Exponential Moving Averages (EMAs), which supports the near-term upward trend. The 14-day Relative Strength Index is 62.30, showing positive momentum without reaching extreme levels.
Immediate resistance is seen at 187.00, followed by the all-time high of 187.95 set on 17 April. If the move extends, the pair could test the upper channel boundary near 188.60.
On the downside, first support is the nine-day EMA at 186.58, then the lower channel boundary around 186.00. If price breaks below the channel, it may move towards the 50-day EMA at 184.51.
We see the bullish technical trend in EUR/JPY is fundamentally supported by monetary policy divergence. The current interest rate differential, with the European Central Bank’s policy rate at 3.5% versus the Bank of Japan’s 0.1%, continues to make holding the Euro more attractive. This policy gap is the primary driver behind the sustained uptrend.
Given the room for upside indicated by the RSI, we are looking at buying call options with strikes near the 188.00 level. This strategy aims to capitalize on a potential move towards the recent all-time high and the upper channel boundary. The latest Eurozone inflation report, showing a steady 2.4%, suggests the ECB will not rush to cut rates, which further strengthens our conviction.
For risk management, the nine-day EMA at 186.58 is our first line of defense. We remember the sharp pullback on intervention fears back in the third quarter of 2025, so a confirmed break below the 186.00 channel support would prompt us to reduce long exposure. Cautious traders might consider buying protective puts below this level to hedge against a similar sudden downturn.
