Analysis of the EUR/JPY Pair 

The EUR/JPY Pair from an Economic Perspective

The EUR/JPY pair is attempting to resume its downward trend once again, particularly following remarks by Japanese Finance Minister Satsuki Katayama after her meeting with her U.S. counterpart, Scott Bessent.

She stated that Japan and the United States have agreed to continue coordinating to achieve “orderly” movements in the yen market, which is of critical importance for global market stability.

The yen’s renewed decline to around 160 yen per dollar has drawn the market’s attention to the possibility of further joint action to support the falling currency.

Katayama also declined to comment when asked whether the yen’s recent decline to near 160 yen per U.S. dollar was orchestrated, saying it is difficult to pinpoint the factors driving exchange rate movements.

Some reports also indicated that Besent urged Bank of Japan Governor Kazuo Ueda to raise interest rates during a separate bilateral meeting, and Katayama clarified that specific monetary policy decisions fall within the Bank of Japan’s purview.

Bessent’s renewed calls for further interest rate hikes have put the Bank of Japan under pressure to raise rates in September and to accelerate the pace of future hikes.

The Bank of Japan will hold its next monetary policy meeting on September 17 and 18, with markets almost universally expecting the bank to raise interest rates to 1.25% from 1% following the hike last June.

EUR/JPY on a Technical Level

The EUR/JPY pair is trading within a narrow range today, Tuesday. The pair reached a high near the 185.70 level and is now attempting to pull back under the influence of a negative MACD divergence.

The pair also retested the broken uptrend line on the hourly chart.

We expect the pair to pull back toward the 185.00 level as an initial target, followed by the 184.50 level as a secondary target.

This scenario would be invalidated if the pair breaks above the 186.05 level.