EUR/JPY Stabilizes Near Multi-Month Highs as ECB Policy Decision Looms

The Euro (EUR) is retreating from earlier gains against the Japanese Yen (JPY) on Thursday, with investor focus shifting to the European Central Bank’s (ECB) monetary policy announcement later in the day. Despite the pullback, the EUR/JPY pair maintains its positive trajectory, trading near three-month highs around the 186.30 technical zone.

Global markets are closely watching the ECB’s policy stance, with expectations that the central bank will hold its deposit facility rate at 2.25% while signaling potential future tightening measures. Rising energy prices, particularly oil, have reignited concerns over inflationary pressures, supporting the case for continued monetary restraint.

The Japanese Yen, meanwhile, faces sustained downward pressure amid stark policy divergences between the Bank of Japan (BoJ) and other major central banks. Bloomberg reports suggest the BoJ may speed up its monetary normalization process, though market participants remain cautious about near-term policy shifts.

Technical Outlook: Bullish Momentum Persists Despite Pullback

EUR/JPY edges lower to 186.44 but retains its bullish structure after correcting from overbought levels. The 4-hour Relative Strength Index (14) at 65 reflects ongoing bullish momentum, while the MACD indicator’s slight positivity suggests constructive price action. Key support aligns with mid-June highs near 186.30, with further cushion seen at last week’s 186.00 peak and Tuesday’s 185.78 low.

Resistance clusters around intraday highs at 186.65, marking the 161.8% Fibonacci extension of the June 21-22 rally. A stronger barrier emerges between 187.44 (261.8% Fibonacci extension) and April 30 highs near 187.55, representing the next upside objective if buying resumes.

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