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EUR/JPY Tests Support at 177.50 Amid Descending Channel
Confirmed
In Short: Technical analysis of the EUR/JPY currency cross shows it is near the lower boundary of a descending channel, indicating support and a possible temporary rebound, according to FXStreet.
Technical analysis of the EUR/JPY currency cross shows it is near the lower boundary of a descending channel, indicating support and a possible temporary rebound, according to FXStreet.
The currency cross has recently slipped below the nearer structural floor at 175.70, turning recent price action into a corrective phase, while the 14-day Relative Strength Index (RSI) at 29.78 hovers in oversold territory, hinting that while downside pressure is strong, fresh selling could become more measured in the short term.
The initial support lies at the lower boundary of the channel around 176.60, followed by an 11-month low of 175.70, recorded in November 2025.
Further resistance lies at the upper boundary of the descending channel around 184.20, followed by the all-time high of 187.95 set on April 17.
The CNB Board remains open to further rate hikes yet sees no need to rush at this moment. However, our economists changed their forecast from unchanged rates to a hike in November, given our upside revision in the Czech inflation forecast and elevated global energy prices.
While the initial market reaction was dovish, rates ultimately ended the day unchanged from pre-decision levels.
Near-term forecasts for the GBP/EUR cross are influenced by Germany’s latest retail sales figures, with a forecast 2% rebound in August potentially giving the Euro a firmer start to the session.
Average diesel prices in the UK have climbed to a new record high, strengthening expectations that the Bank of England (BoE) could raise interest rates, while at the same time adding to concerns over the UK’s cost-of-living pressures.
Moves have been modest but clearly visible in Asian trade, with the yen the session's underperformer after Japan August inflation data undershot forecasts across the board, and the Australian dollar the stronger performer following Governor Bullock's comments to a parliamentary committee.
Japan's national consumer price data for August, released a few minutes into the session, undershot forecasts across every measure the market watches.
The core reading, which excludes fresh food, printed at 1.7%, below the 1.8% forecast and down from July's 1.8%.
Background
Technical analysis of the EUR/JPY currency cross shows it is near the lower boundary of a descending channel, indicating support and a possible temporary rebound.
What's confirmed
- Technical analysis of the EUR/JPY currency cross shows it is near the lower boundary of a descending channel, indicating support and a possible temporary rebound, according to FXStreet.
- The currency cross has recently slipped below the nearer structural floor at 175.70, turning recent price action into a corrective phase, while the 14-day Relative Strength Index (RSI) at 29.78 hovers in oversold territory, hinting that while downside pressure is strong, fresh selling could become more measured in the short term.
- The initial support lies at the lower boundary of the channel around 176.60, followed by an 11-month low of 175.70, recorded in November 2025.
- Further resistance lies at the upper boundary of the descending channel around 184.20, followed by the all-time high of 187.95 set on April 17.
- The CNB Board remains open to further rate hikes yet sees no need to rush at this moment. However, our economists changed their forecast from unchanged rates to a hike in November, given our upside revision in the Czech inflation forecast and elevated global energy prices.
- While the initial market reaction was dovish, rates ultimately ended the day unchanged from pre-decision levels.
- Near-term forecasts for the GBP/EUR cross are influenced by Germany’s latest retail sales figures, with a forecast 2% rebound in August potentially giving the Euro a firmer start to the session.
- Average diesel prices in the UK have climbed to a new record high, strengthening expectations that the Bank of England (BoE) could raise interest rates, while at the same time adding to concerns over the UK’s cost-of-living pressures.
- Moves have been modest but clearly visible in Asian trade, with the yen the session's underperformer after Japan August inflation data undershot forecasts across the board, and the Australian dollar the stronger performer following Governor Bullock's comments to a parliamentary committee.
- Japan's national consumer price data for August, released a few minutes into the session, undershot forecasts across every measure the market watches.
- The core reading, which excludes fresh food, printed at 1.7%, below the 1.8% forecast and down from July's 1.8%.
What's still developing
- However, a break below the channel would signal accelerating downward momentum in a steeper downtrend.
- The forecasted closing price for AUD/USD is 0.6900, with a range of 0.6880 to 0.6920.
- The Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's favorite inflation gauge, came in softer than anticipated in August, holding at 3.4%, while the July reading was downwardly revised from 3.7% to 3.4%.
- Gold price forecasts remain positive, with UBS projecting a recovery to $4,600 by December, despite hawkish comments from Fed officials capping upside potential.
- The gold price’s recovery alongside rising inflation expectations has SEB watching for a shift away from the US Dollar and towards hard assets.
- "adopt a less hawkish tone in their public comments, thereby dampening expectations of interest-rate hikes and easing pressure on government bonds."