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EUR/JPY Holds Below Nine-Day EMA Near 185.50 – Technical Outlook

As of early trading on [current date], the EUR/JPY cross currency pair remains under pressure, trading below its nine-day exponential moving average (EMA) near the 185.50 level. The pair’s inability to reclaim this short-term indicator suggests that bearish momentum may persist in the near term, with traders closely watching key support and resistance zones for directional cues.

Technical Analysis: Nine-Day EMA as Key Resistance

The nine-day EMA has emerged as a critical resistance level for EUR/JPY, capping upside attempts since the pair’s recent decline. The current price action shows the pair hovering around 185.50, with the EMA acting as a dynamic ceiling that has rejected multiple rally attempts. A sustained break above this level could signal a shift in momentum, potentially opening the door for a test of the 187.00 region, while failure to do so may lead to further downside toward the 184.00 support area.

Market Drivers: Diverging Monetary Policies and Risk Sentiment

The EUR/JPY pair is heavily influenced by the monetary policy stances of the European Central Bank (ECB) and the Bank of Japan (BoJ). The ECB has maintained a hawkish tone, emphasizing the need for further rate hikes to combat inflation, while the BoJ remains committed to its ultra-loose monetary policy, keeping yields low. This policy divergence has historically favored the euro, but recent risk-off sentiment and safe-haven flows into the yen have put downward pressure on the cross. Additionally, global economic uncertainties and geopolitical tensions are prompting investors to seek refuge in the Japanese currency, further weighing on EUR/JPY.

Key Levels to Watch

Traders should monitor the following levels for potential breakout or breakdown scenarios:

• Resistance: Nine-day EMA near 185.50, followed by 186.20 and 187.00.
• Support: 184.00 (recent swing low), 183.50, and 182.80 (psychological level).

A close above the EMA on a daily basis could attract bullish momentum, while a break below 184.00 may accelerate selling pressure.

Implications for Forex Traders

For forex traders, the current positioning of EUR/JPY below the nine-day EMA suggests a cautious approach. Short-term traders may look for short opportunities on rallies toward the EMA, while swing traders might wait for a clear breakout above 186.20 to confirm a reversal. Risk management remains crucial, given the pair’s sensitivity to central bank commentary and macroeconomic data releases. The upcoming eurozone inflation figures and BoJ policy signals will be pivotal in determining the next directional move.

Conclusion

EUR/JPY remains technically bearish as long as it trades below the nine-day EMA near 185.50. The pair’s fate hinges on whether buyers can reclaim this level or if sellers maintain control, with key support at 184.00. Traders should stay alert to central bank news and broader risk sentiment, as these factors are likely to drive volatility in the sessions ahead.

FAQs

Q1: What is the nine-day EMA and why is it important for EUR/JPY?
The nine-day EMA is a short-term moving average that smooths price data over nine periods, often used by traders to gauge immediate trend direction. For EUR/JPY, it acts as a dynamic resistance level, and a break above or below can signal potential trend changes.

Q2: What are the key support and resistance levels for EUR/JPY right now?
Key resistance is at the nine-day EMA near 185.50, with further levels at 186.20 and 187.00. On the downside, support is seen at 184.00, followed by 183.50 and 182.80.

Q3: How do central bank policies affect EUR/JPY?
The ECB’s hawkish stance and the BoJ’s ultra-loose policy create a yield differential that typically supports the euro. However, risk-off sentiment and safe-haven demand for the yen can override this, causing EUR/JPY to decline.

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EUR/USD Technical Analysis

The euro has been trying to recover early on Monday, but in a very lackluster fashion. I think at this point, traders are out there trying to sort out what the Friday speech actually means for forex markets when Kevin Warsh basically eliminated the idea of Federal Reserve rate cuts that many traders had been trying to price in.

As usual, the market got way ahead of itself with that. We’ve been seeing this for a couple of years now where the market gets excited about potential rate cuts coming out of the United States for a couple of weeks, and then reality sets in. And I think that’s part of what’s going on here.

So, I’m watching the euro to sell it, not to buy it. Somewhere around the 1.1620 level, if we start to see signs of exhaustion, that would be about a 50% retracement of the move from Friday; I might look for getting short there.

GBP/USD Technical Analysis

The British pound, I think, is probably going to be somewhat range-bound, mainly because the British pound, of course, has a higher interest rate attached to it. So, it is a little insulated from US dollar strength, and I think most of the reaction was more about the US dollar than anything else.

I wouldn’t read too much into British pound weakness, because at this point in time, even if I want to buy the US dollar, I am going to short other currencies, weaker currencies.

The British pound for me is what I want to buy if the US dollar starts to roll over. Right now, it looks pretty weak, so while shorting the pound could be possible in this general vicinity, the reality is we will probably get more mileage out of other currencies.

USD/CAD Technical Analysis

The US dollar against the Canadian dollar is what I’m looking to buy on a little bit of a dip, and there’s a whole host of reasons for this, not the least of which is that the United States and Canada are still in a trade war, and quite frankly, that’s not an even match.

So, I like the idea of buying the US dollar on dips here, and it would not surprise me over the next day or two to go looking toward the 1.3950 level.

We’ll just see how this plays out. Rates in America continue to rise; that only adds more fuel to the fire.

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This article was originally posted on FX Empire

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The British pound, I think, is probably going to be somewhat range-bound, mainly because the British pound, of course, has a higher interest rate attached to it. So, it is a little insulated from US dollar strength, and I think most of the reaction was more about the US dollar than anything else.

I wouldn’t read too much into British pound weakness, because at this point in time, even if I want to buy the US dollar, I am going to short other currencies, weaker currencies.

The British pound for me is what I want to buy if the US dollar starts to roll over. Right now, it looks pretty weak, so while shorting the pound could be possible in this general vicinity, the reality is we will probably get more mileage out of other currencies.

USD/CAD Technical Analysis

The EURJPY pair confirmed its submission to the bearish corrective bias by posting a new negative close below the barrier at 186.05. The pair is currently responding to the negative pressure from the Stochastic indicator, slipping toward 185.20.

We expect the pair to resume its corrective attempts, targeting 184.85 and 184.40 respectively. However, a successful break above the previously mentioned barrier and holding above it would confirm the pair’s readiness to resume its main bullish attack, with the next target expected at 186.65.

The expected trading range for today is between 184.40 and 185.50.

Trend forecast: Bearish

– Written by


James Fuller

STORY LINK Pound-to-Dollar Forecast: Hawkish Warsh Boosts USD, GBP Retreats to 1.3530

The Pound to Dollar (GBP/USD) exchange rate came under renewed pressure at the end of last week as a hawkish Jackson Hole speech from Federal Reserve Chair Kevin Warsh strengthened expectations of another US interest-rate increase.

GBP/USD retreated to around 1.3535 on Friday, down almost 0.5% on the day and well below the six-month highs above 1.3670 recorded earlier in August.

The Pound was unable to make headway in global markets, while the Dollar received fresh support as investors reassessed the outlook for Federal Reserve policy.

There remains an important support area around 1.3500-1.3550.

Scotiabank had maintained a constructive technical stance; “We see near-term support around 1.3600 and 1.3550. The trend from late June remains bullish however.”

Friday’s move below 1.3550 therefore weakens the immediate technical picture, although GBP/USD remains above the broader summer lows.

Warsh Revives September Fed Hike Expectations

Federal Reserve Chair Kevin Warsh used his first Jackson Hole speech to reinforce the central bank’s commitment to returning inflation to its 2% target.

Warsh warned that financial conditions remained relatively loose and indicated that the Fed could need to raise interest rates if inflation fails to moderate sufficiently.

His comments represented a more hawkish message than investors had expected.

Markets subsequently raised the probability of a September rate increase to around 55%, compared with roughly 35% ahead of the speech.

This shift in expectations provided renewed support for US bond yields and the Dollar.

Danske Bank had commented ahead of the speech; “Markets will look for any hints about monetary policy in September.”

The speech ultimately provided a clearer signal than many investors had anticipated.

ING had previously maintained that the Fed would remain on hold in September, but acknowledged that stronger data or more hawkish communication could change market pricing.

The coming US inflation and employment figures will now carry even greater importance.

Energy Prices Remain Important for Central Banks

Energy prices will continue to be an important backdrop for monetary policy on both sides of the Atlantic.

MUFG commented; “The price of crude oil continues to defy expectations of sharper price rises and how the energy price story plays out over the coming weeks will be an important backdrop heading into a heavy month of G10 central bank meetings.”

Every major G10 central bank is due to meet during September, leaving markets unusually sensitive to shifts in inflation expectations and bond yields.

Higher energy prices would strengthen the argument for tighter monetary policy, while a sustained decline would reduce pressure on central banks to act.

UK rate expectations have moved in the opposite direction to the US in recent sessions.

Markets no longer fully price another Bank of England rate increase until early 2027, with only a limited probability attached to a September move.

Most economists expect the BoE to keep Bank Rate unchanged at 3.75% for the remainder of 2026.

Wider US economic fundamentals also continue to provide some support for the Dollar.

Brown Brothers Harriman global head of markets strategy Elias Haddad commented; “The big support for the dollar here is that the U.S. economy continues to outpace that of other major economies.”

He nevertheless remains cautious over the medium-term outlook.

Haddad added; “I don’t expect the dollar to make new highs, because of the risk of a more dovish Fed repricing and the lack of U.S. fiscal credibility are two big headwinds.”

US fiscal concerns remain significant, particularly after the recent surge in long-term Treasury yields and the Treasury’s decision to expand bond buybacks.

European central bankers have also expressed unease over increasingly unconventional US Treasury actions and the risk that political pressure could spill over into monetary and currency policy.

Near-Term GBP/USD Forecast: 1.35 Support Comes into Focus

GBP/USD has now surrendered most of the gains made during the middle of August.

The 1.3500-1.3530 area is the immediate support zone.

A sustained break below 1.3500 would weaken the short-term structure further and could expose 1.3450 followed by the August low around 1.3420.

On the upside, Sterling would need to regain 1.3600 to ease the immediate downward pressure.

A recovery above 1.3650 would be required to restore the stronger bullish structure seen earlier in August.

The combination of higher Fed rate expectations and weaker Bank of England tightening bets favours the Dollar, leaving upcoming US inflation and labour-market data crucial for the next GBP/USD move.

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TAGS: Pound Dollar Forecasts

The Pound-Dollar rate has fallen back to 1.3534 after Jackson Hole, but UBS still sees Sterling at 1.40 by December and 1.41 through much of 2027.

The Pound to Dollar (GBP/USD) exchange rate ended Friday at 1.3534, down 0.46% after Kevin Warsh revived expectations for another Federal Reserve rate increase.

That leaves Cable well below its August high at 1.3675, but UBS has made no retreat from its bullish medium-term Sterling path.

Its updated forecast table reads: “GBP/USD: 1.40 Dec 2026, 1.41 Mar 2027, 1.41 Jun 2027, 1.41 Sep 2027.”

The rationale was set out more fully by UBS strategists Constantin Bolz and Dominic Schnider earlier this month.

“UK politics have shifted from a headwind to a potential tailwind,” they said, while “[Pound] Sterling remains relatively under-owned.”

That under-ownership matters if investors return after Friday’s Dollar-driven correction.

UBS has also argued that “long-dollar positioning remains vulnerable to a reversal”, creating scope for “existing long-dollar positions [to] be unwound” if Fed expectations soften again.

Friday went the other way.

Warsh pushed the implied probability of a September Fed hike from around 35% before his speech to 57.5%, while Sterling suffered its first weekly decline against the Dollar in more than a month.

We previously examined UBS’s increasingly positive Sterling view before the Jackson Hole reversal.

The forecast now has a cleaner test: holding around 1.35 would leave the 1.40 year-end scenario plausible, while renewed Fed tightening pressure would make the first hurdle, around 1.38, considerably harder to clear.

Our currency coverage draws on live market data, official economic releases and published bank research.

USD/JPY is back above 160 despite record intervention, reinforcing UniCredit’s warning that FX operations struggle when fundamentals resist them.

The US Dollar to Japanese Yen (USD/JPY) exchange rate closed Friday at 160.10, almost five Yen above the lows reached after the extraordinary joint US-Japan intervention.

That rebound is the uncomfortable backdrop to UniCredit’s question: “Is FX intervention a ‘losing game’? The JPY’s case.” The current analysis was published on 26 August.

UniCredit analysts had already made their underlying objection unusually clear before the joint operation.

“It would be a waste of FX reserves if the USD is already strong due to factors outside of Japan’s control,” the bank argued in earlier Yen analysis.

At the same time, UniCredit expected officials to keep trying: “We expect intervention to resume.”

The issue was never whether intervention could move USD/JPY for a few sessions.

It was whether intervention could overcome the interest-rate gap, expansionary Japanese fiscal policy and the economic damage from high imported energy costs.

Japan has now spent a record ¥15.4tn, around $96.5bn, intervening between 30 July and 26 August, yet Dollar-Yen finished August back above 160.

That outcome gives the “losing game” thesis more force.

As we noted in our recent Yen forecast, markets increasingly need the Bank of Japan to do part of the work itself.

A September rate increase could help.

Without a credible path towards further tightening, another intervention may again prove spectacular in the moment and frustratingly temporary afterwards.

Our currency coverage draws on live market data, official economic releases and published bank research.

The Euro-Dollar has dropped to 1.158 after Warsh revived Fed hike bets, but Rabobank still sees choppy trade giving way to 1.18 into spring.

The Euro to Dollar (EUR/USD) exchange rate ended Friday at 1.1582 after Kevin Warsh’s Jackson Hole speech triggered the Dollar’s strongest daily advance in more than two months.

The pair had spent most of the previous 48 hours between 1.1640 and 1.1660 before collapsing through 1.1600, leaving Friday’s close close to the bottom of the session range.

Rabobank still expects the broader picture to remain frustratingly two-sided rather than turn into a clean Dollar rally.

“We see scope for further choppy range trading in EUR/USD in the coming months with an upside bias likely lifting the currency pair to the 1.18 area into the spring.”

That forecast looks more interesting after Friday.

Warsh pushed the market-implied probability of a September Fed hike from around 35% to 57.5%, while EUR/USD fell roughly 0.6% to 1.1582.

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Friday’s break lower interrupted what had been a surprisingly resilient August for the Euro, but Rabobank does not think the pair will be driven primarily by European developments from here.

“In view of the imbalance of uncertainties, we expect that price action in EUR/USD in the coming weeks will continue to be dominated by news pertaining to the USD rather than the EUR.”

The “Bessent Put” Complicates the Dollar Story

Rabobank’s argument centres on an increasingly awkward relationship between the US Treasury and the Fed.

“Since the announcement last week that the US Treasury would at least double the size of its bond buyback operations, the market has been discussing the potential for a ‘Bessent put’ and how willing the US Treasury Secretary may be to stem a rise in long-term interest rates.”

The bank sees an obvious political incentive ahead of November’s mid-term elections, but also a cost.

“The market’s ability to signal concerns over fiscal policy, inflation and reflect a true balance between supply and demand could be dampened.”

“This has raised questions over the Treasury’s credibility, which have re-opened the debate about USD debasement.”

Lower long-term yields could also keep financial conditions looser than they otherwise would be, potentially leaving inflation higher for longer and increasing the prospect of tension between Treasury policy and the Fed.

That tension was visible even before Warsh spoke, with Reuters highlighting the contrast between Treasury efforts to push long yields down and the Fed Chair’s emphasis on maintaining inflation discipline.

Rabobank Trusts the ECB More Than the Fed

The Eurozone hardly has an easy inflation outlook either.

Rabobank notes that headline inflation reached 3.2% earlier this year as the Iran-war energy shock fed into consumer prices, with the duration of the conflict still critical for the outlook.

Yet the bank sees one important difference.

“The market has a strong belief in the ECB’s inflation fighting credentials. The Fed’s credibility, by contrast, is still up for debate.”

Eurozone inflation expectations have remained relatively contained, while Rabobank expects another ECB hike in September after June’s increase.

The economy has also held up better than feared.

“Stronger than expected Eurozone Q2 GDP growth data and a decent round of August PMI numbers reflect an economy which has been resilient in the face of this year’s energy price shock.”

That resilience has not translated into aggressive Euro buying.

“The market has been reluctant to build long EUR positions against the backdrop of the Iran war in view of the Eurozone’s energy importer status and the headwinds to growth and inflation that this status implies.”

Hence Rabobank’s near-term conclusion is deliberately restrained.

“In the absence of an end to the war, we expect the EUR’s upside potential to remain contained and favour choppy range trading for EUR/USD around the 1.16 to 1.17 area in the months ahead.”

That 1.16 floor is already being tested after Warsh.

We noted in our previous Rabobank EUR/USD forecast that the bank had brought forward its 1.18 target as US debt-market concerns intensified.

Friday has not removed that forecast, but it has made the path rather less comfortable.

If Fed hike pricing continues to build, EUR/USD can spend more time below Rabobank’s preferred 1.16-1.17 zone.

If Treasury intervention again pulls long yields lower while confidence in US policy comes under pressure, the Dollar side of the equation could reverse quickly.

For Rabobank, that tug of war is the forecast: messy around 1.16-1.17 first, then a gradual move towards 1.18 into spring.