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Technical Breakdown Signals End of Recent Bullish Momentum
Forex
Central Bank
Summary:
Since hitting this high, the price has begun a corrective move lower, developing a technical structure known as an Ascending Wedge formation.
Sell
TradingEURJPY
EXP
177.609
Entry Price
175.000
TP
179.200
SL
177.034 -0.593 -0.33%
0
Point
Flat
175.000
TP
CLOSING
177.609
Entry Price
179.200
SL
The latest data from the Eurozone confirmed a limited improvement in manufacturing activity, suggesting a gradual stabilization rather than outright growth. The HCOB Manufacturing Purchasing Managers’ Index (PMI) settled at 50.0 in October, a marginal increase from 49.8 in September, signaling a stagnation in production. National figures were mixed: the German PMI was 49.6, France's rose to 48.8, Italy's was 49.9, and Spain's stood at 52.1. While most readings remain below the critical 50.0 expansion threshold, the figures collectively suggest the industrial sector is slowly finding a floor.
On the monetary front, François Villeroy de Galhau, Governor of the Bank of France and ECB policymaker, stated on Friday that the ECB is "in a good position" following its October rate decision. He stressed the need to maintain full flexibility in light of market risks. His Latvian counterpart, Martins Kazaks, reinforced this cautious stance, adding that risks to inflation and growth are now more balanced, strengthening the argument for keeping current rates unchanged for longer. Adding to the consensus, on Monday, Governor Peter Kazimir of the National Bank of Slovakia (NBS) stated there is no need to alter or adjust monetary policy, as the risks to both inflation and the economy remain largely balanced.
ECB President Christine Lagarde strongly emphasized the central bank's positive outlook, asserting that the ECB is "in a good position" and committed to doing whatever is necessary to maintain such a favorable stance.
In Japan, the Bank of Japan (BoJ) maintained interest rates unchanged at 0.50% for the fifth consecutive meeting last week. Governor Kazuo Ueda reiterated the central bank's need to see clearer evidence of sustained wage growth before considering any further policy adjustments. He also noted that the BoJ wishes to "take a bit more time to see how the impacts of U.S. tariffs would affect the Japanese economy."
Key data releases for Japan are forthcoming this week, including the Jibun Bank Manufacturing PMI for October, due on Tuesday, which will shed light on factory activity, followed by the minutes from the latest BoJ policy meeting on Wednesday.
Technical Analysis
EUR/JPY has maintained a powerful bullish impulse, rallying from 174.98 up to the recent peak of 178.82 on October 30th. Since hitting this high, the price has begun a corrective move lower, developing a technical structure known as an Ascending Wedge formation. This pattern typically precedes a downward breakdown
A decisive close below the lower boundary of the wedge would likely unleash a deeper correction, targeting the key support level at 174.98. This support is significant as it marks the low established after the price gapped higher on October 3rd, following the recent change in the Japanese government.
The 100- and 200-period Moving Averages (MAs) on the 4-hour chart are positioned at 176.74 and 175.71, respectively. The 100-period MA has been tracking the price closely as a dynamic support and is currently running very near the lower boundary of the wedge formation. A clear break below this MA level would likely lead to a further acceleration of the downward move. The 200-period MA sits near the key support level, increasing the probability that any correction would aim for this zone.
The RSI is at 48, pulling back sharply from a peak of 78. Although not currently oversold, the position of the RSI suggests that bearish momentum could continue if the wedge structure holds. The downside setup will be negated if the price breaks decisively above 178.50, which would open the path for a renewed bullish impulse.
Trading Recommendations
Trading direction: Sell
Entry price: 177.60
Target price: 175.00
Stop loss: 179.20
Validity: Nov 14, 2025 15:00:00
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