FX.co ★ amiron56 | EUR/JPY

The following analysis examines the EUR/JPY currency pair as of January 4, 2026, with a current market price of 183.74. This report integrates the most recent fundamental shifts from the European Central Bank and the Bank of Japan with a technical framework designed for the current high-volatility environment. Fundamental macro landscape The EUR/JPY pair is entering 2026 under a regime of monetary divergence that is notably different from previous years. The primary driver is the Bank of Japans aggressive transition out of its decades-long ultra-loose policy. In December 2025, the BOJ raised its policy rate to 0.75%, the highest level since 1995. Japanese inflation remains sticky above the 2% target, supported by robust wage growth exceeding 4%. This has transformed the Yen from a passive funding currency into a strengthening asset, creating a fundamental "cap" on the EUR/JPY pair. On the European side, the European Central Bank has successfully steered the Eurozone toward a soft landing. The ECB currently maintains its deposit rate at 2.15% after a series of cuts in 2024 and 2025. While the Eurozone economy is showing signs of moderate recovery with growth projected at 1.2% for 2026, the central bank has signaled a "hold" pattern for the foreseeable future. This lack of upward interest rate momentum for the Euro, combined with the rising rates in Japan, suggests that the yield differential which previously favored the Euro is rapidly narrowing. Upcoming economic events Traders should maintain a high degree of alertness for several key events in January 2026 that are likely to trigger significant price action: Bank of Japan Monetary Policy Meeting (January 22-23): This is the most critical catalyst. Markets are currently pricing in a 40% chance of another 25 basis point hike. Even a "hold" accompanied by hawkish forward guidance could trigger a Yen rally. Eurozone Flash HICP Inflation: Set for release in mid-January, this data will confirm if inflation is stabilizing at the ECBs 2% target. A lower-than-expected reading would increase pressure on the ECB to consider rate cuts, weakening the Euro. Tokyo Core CPI: This leading indicator for national Japanese inflation will be released late in the month. Persistently high service-sector inflation would provide the BOJ with the justification needed for continued tightening. Technical resistance and support The current price of 183.74 places the pair in a consolidation zone just below the multi-year highs. Resistance Levels: Major Resistance: 185.25. This level acted as a firm ceiling in late 2025. A decisive daily close above this would be required to re-establish a long-term bullish trend. Secondary Resistance: 184.70. This represents the recent swing high where selling pressure has consistently emerged over the last three weeks. Support Levels: Immediate Support: 182.95. This level aligns with the middle Bollinger Band on the daily chart and has served as a pivot point for short-term intraday moves. Major Support: 180.65. A critical horizontal level that provided a floor during the December retracement. Trend Support: 177.80. This level is home to the 100-day Exponential Moving Average (EMA). As long as price remains above this, the broader multi-month uptrend is technically intact. Fibonacci tuning for market entry To identify the most precise entry and exit points for the start of 2026, we apply the Fibonacci retracement tool to the major move from the 2025 low of 162.10 to the peak of 184.70. The 23.6% Retracement (179.40): This is the primary target for a shallow correction. If the price drifts to this level, it represents a high-probability "buy the dip" opportunity for traders looking to play the long-term trend. The 38.2% Retracement (176.10): This is the "Golden Ratio" support zone. A move to this level would represent a healthy correction in a bull market. Institutional buyers often set limit orders in this vicinity. The 0% Level (184.70): This serves as the ultimate target for current long positions and a logical place to take profits or tighten stop-losses. Moving average and MACD strategy The current strategy for EUR/JPY utilizes a combination of trend-following and momentum confirmation to manage the narrowing yield spread. Moving Average Setup: The pair is currently trading above the 100-day EMA (177.80) and the 200-day EMA (174.50), confirming a long-term bullish bias. However, the price is currently testing the 20-day Simple Moving Average (SMA) near 183.80. Strategy: If the daily candle closes below the 20-day SMA, it suggests a short-term bearish shift, favoring a move toward the 182.50 support. Conversely, a bounce from the 20-day SMA validates current strength. MACD Indicator Tuning: The MACD on the daily timeframe is showing a bearish divergence. While the price reached a high of 184.70 in late December, the MACD histogram failed to make a new high. Strategy: Watch for a MACD signal line crossover below the zero line. This would provide a high-conviction "Sell" signal, indicating that the upward momentum has officially exhausted. Integrated trading strategy Given the current market price of 183.74 and the looming BOJ meeting, a "Sell on Strength" or "Breakout Support" approach is recommended for January. Sell Scenario: If the price rallies toward the 184.50-184.70 resistance zone and the MACD confirms a bearish crossover, consider a short position. The primary target would be 180.95, with a secondary target at the 23.6% Fibonacci level of 179.40. A stop-loss should be placed strictly at 185.35 to protect against a surprise Euro breakout. Buy Scenario: If the price retraces to the 182.50 support level and shows a bullish rejection candle (such as a hammer or long-wick pin bar), a long position can be entered targeting 184.70. In this case, the stop-loss should be placed at 181.80. In conclusion, EUR/JPY is currently in a "wait and see" mode ahead of the critical late-January central bank meetings. While the technical trend remains upward, the fundamental shift toward a stronger Yen suggests that the upside is limited. Traders should prioritize the 184.70 resistance as a key decision point.