EUR/JPY Technical Analysis: Holding Above 100-day MA, Bullish Momentum Remains Dominant

In early Asian trading on Thursday, March 13, 2025, the Euro against the Japanese Yen (EUR/JPY) experienced a slight pullback, dipping below the key psychological level of 182.50, but overall remains firmly above the 100-day Exponential Moving Average (EMA), indicating strong market resilience. This movement is underpinned by the continued divergence in monetary policy paths between the European Central Bank and the Bank of Japan, providing clear structural opportunities for traders. Technically, EUR/JPY has recently retreated from its weekly high of around 183.20, with initial support located near 182.30. The market generally believes that this adjustment is a healthy retracement rather than a trend reversal. The 100-day EMA, currently at 181.85, has effectively supported price rebounds four times in the past three months, becoming a crucial dynamic support barrier. The Relative Strength Index (RSI) is stable at 58, in the neutral zone, showing no overbought signals; while the Moving Average Convergence Divergence (MACD) histogram remains positive, indicating that upward momentum has not yet faded. Key price areas to watch closely: a break below 181.80 could test the short-term support at 180.50; a strong break above 182.80 could restart the upward channel towards 184.00.

Fundamentally, the interest rate differential between the Euro and the Yen remains the core factor driving the trend. The Eurozone's annualized inflation rate for February 2025 was 2.4%, which, although lower than the previous period, is still above the European Central Bank's target of 2%, prompting officials to release cautious signals on interest rate cuts. The market expects only two 25 basis point rate cuts throughout 2025. In contrast, the Bank of Japan continues to maintain an ultra-loose policy framework. Although there have been slight adjustments recently, core inflation (excluding fresh food) was only 2.1% in January 2025, just touching the target. The Bank of Japan continues to suppress the 10-year government bond yield near 1.0% through Yield Curve Control (YCC), creating a significant interest rate differential with the Eurozone, which continues to support the Euro's strength. According to comprehensive institutional views, the current market structure is still biased towards the bulls. Despite short-term technical pullback pressure, the combination of macro policy differences and capital flow trends supports the medium-to-long-term upward pattern of EUR/JPY. Traders should pay attention to opportunities to establish long positions near key support levels, while remaining vigilant about the potential risks of a policy shift by the Bank of Japan.