Created on December 26, 2025

• The Euro has drifted a bit lower against the Japanese yen during the trading session on Wednesday as we continue to see a lot of noisy behavior.
• All things being equal, this is a market that I think continues to see a lot of upward trajectory and upward momentum.
• The 182 yen level is an area that I think offers a bit of a floor at this point in time, as it had previously been both support and resistance.
• With this being the case, the next support level that we would look at is the 50-day EMA, which sits just above the 180 yen level.

Any pullback at this point in time will more likely than not be interesting for those willing to take advantage of the overall trend, and I do think that it’s only a matter of time before we bounce and go looking to the 185 yen level for a longer-term move.

Interest Rate Differentials and BoJ Policy

Ultimately, the interest rate differential still favors the European currency over the Japanese one, and therefore I think we’ve got a situation where a lot of traders are hanging on to this and collecting that swap at the end of every day. I have no interest in shorting anytime soon, but if we did break down below the 175 yen level, then we would have to think about that.

All things being equal, this is a market that I think remains one that is probably going to move mainly based on the Japanese yen itself, as the Bank of Japan has found itself in a little bit of trouble suggesting that they were going to tighten monetary policy because it appears that the financial markets think that will do nasty things to the Japanese economy, especially considering all of the debt that the Japanese currently hold.

With this and the fact that we’ve been in a nice 45-degree uptrending angle for what seems like a lifetime, I have no interest in shorting, and I do think that we eventually not only hit 185 yen but probably higher.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.