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EUR/JPY Climbs to Seven-Month High as Euro Strengthens on ECB Pivot and Safe-Haven Appeal
Economic
Summary:
EUR/JPY surged near 166.60 on Thursday, reclaiming early-session losses as the Euro gained broad strength.
Buy
TradingEURJPY
EXP
166.297
Entry Price
168.500
TP
164.000
SL
166.503 +0.377 +0.23%
0
Point
Flat
164.000
SL
CLOSING
166.297
Entry Price
168.500
TP
The Euro staged a decisive comeback against the Japanese Yen during European trading hours on Thursday, pushing the EUR/JPY pair to its highest level since November 2023. After dipping earlier in the session, the pair reversed course and advanced toward 166.60, fueled by both supportive central bank commentary and growing risk aversion in global markets.
At the heart of the Euro’s rally was a clear message from European Central Bank officials: the prolonged cycle of monetary easing appears to be drawing to a close. Isabel Schnabel, a prominent ECB board member, signaled that the current policy path is reaching its endpoint, citing evidence that eurozone inflation is stabilizing near the central bank’s target. Speaking in Brussels, Schnabel noted, “This monetary-policy cycle is coming to an end as medium-term inflation is stabilizing around target,” as reported by Bloomberg. She projected inflation to hover around 1.9% through 2026 and 2027—just shy of the ECB’s 2% objective—while also noting that the eurozone’s growth outlook remains stable despite rising global trade tensions.
Her remarks reinforced similar sentiments expressed last week by Madis Müller, Governor of the Bank of Estonia and an ECB policymaker, who said he was comfortable with ECB President Christine Lagarde’s assertion that the easing cycle is “almost finished.” That statement followed the ECB’s move to cut rates by 25 basis points for the seventh consecutive time, bringing the deposit rate to 2%. Collectively, the commentary is feeding speculation that the central bank will shift to a longer-term pause, marking a subtle but important pivot in eurozone monetary policy.
Beyond rate speculation, the Euro’s gains are being amplified by its role as a safer alternative to the U.S. Dollar. Traditionally seen as a risk-off hedge, the Euro is increasingly benefitting from capital flows seeking refuge from the uncertainty swirling around Washington’s trade policy direction. With new tariff threats hanging over both China and the European Union, investors are finding fewer reasons to hold the Dollar, especially as political and fiscal risks in the U.S. grow more pronounced ahead of the November election. In this context, the Euro’s liquidity and relative stability make it a compelling hedge.
Meanwhile, the Japanese Yen, although weaker in this particular cross, continues to demonstrate resilience across other major pairs. Expectations remain firm that the Bank of Japan is gradually preparing to tighten policy further. BoJ Governor Kazuo Ueda reaffirmed this week that another interest rate hike could be on the table if the central bank gains confidence that underlying inflation will sustainably hover around 2%. That said, most analysts expect the BoJ to hold interest rates steady at 0.5% in its upcoming policy meeting on Tuesday. Investors will be watching closely for any shift in forward guidance that might point to rate normalization later in the year.
Technical Analysis
From a technical standpoint, EUR/JPY’s rally is being supported by a strong bullish structure. The pair recently confirmed its upward momentum after reaching the overbought zone on the stochastic oscillator, breaking above the 166.45 resistance level before briefly retreating to 165.75. The correction was short-lived, as the pair found firm support within its ascending channel, anchored by the 164.80 level. With this structure intact, traders are keeping their eyes on the next upside targets.
If EUR/JPY manages to decisively break and hold above the 166.45 mark, it could initiate a fresh leg higher toward 167.25. A continued bullish push might ultimately take the pair to the upper boundary of its channel near 168.50. Despite temporary fluctuations, the technical setup remains favorable for the bulls, so long as price action remains above the key support zones.
TRADE RECOMMENDATION
BUY EURJPY
ENTRY PRICE: 166.30
STOP LOSS: 164.00
TAKE PROFIT: 168.50
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