EUR/JPY fell for a second day and traded near 183.00 in early European hours on Friday. The daily chart shows a bearish near-term tone, with price held below the nine-period and 50-period Exponential Moving Averages (EMAs).
The pair has pulled back from recent highs, and the 14-day Relative Strength Index (RSI) is 40.9. This points to downside pressure, without reaching oversold levels.
Key Support And Resistance Levels
Support is seen near 181.87, the 10-week low set on March 16. The next level is 180.81, a near five-month low from February 12.
Resistance sits at the 50-day EMA of 184.97, then the nine-day EMA at 185.59. A move above both averages could shift the near-term tone higher and open a test of 187.95, the all-time high from April 17.
An AI tool was used to help write the technical analysis section.
Given the bearish short-term outlook for EUR/JPY, we see the cross is trading below key moving averages, signaling weakness. With the RSI at 40.9, there appears to be more room for a downward move before conditions become oversold. This suggests that initiating bearish positions could be a prudent strategy in the coming days.
Risk Management And Alternate Scenarios
For traders using options, buying put options with a strike price near the 10-week low of 181.87 could be an effective way to play this expected decline. This strategy offers a defined risk while allowing for profit if the pair continues its descent toward the five-month low of 180.81. The premium paid for the option would be the maximum potential loss on the trade.
This technical view is supported by fundamental factors, as recent data from Destatis showed German industrial production unexpectedly fell by 0.5% in March, raising concerns about the Eurozone’s economic engine. Meanwhile, comments from Bank of Japan officials hint at a potential hawkish pivot, with April’s core inflation in Tokyo hitting 2.3%, slightly above expectations. This policy divergence is adding to the downward pressure on the EUR/JPY cross.
We remember the sharp JPY appreciation in late 2025 when global growth fears surfaced, pushing this cross down significantly in a short period. The current setup feels familiar, though the drivers are more focused on domestic policy divergence. The market seems to be pricing in a less accommodative Bank of Japan, which historically strengthens the yen.
However, we should stay disciplined and watch the key resistance levels closely. A move above the 50-day EMA at 184.97 would be our first signal that this bearish momentum is fading. Traders could place stop-loss orders just above this level to manage risk on any short positions.
If the cross reclaims those moving averages, we could consider buying call options with strikes around 186.00 to target a retest of the April high near 187.95. This would represent a significant reversal of the current trend. Such a move would invalidate the immediate bearish case and signal that buyers have regained control.
