The EUR/JPY currency pair stays steady around 184.15 early in the European session. Traders are watching for resistance at 185.00 and support at 183.85, with a positive RSI and strength above the 100-day EMA. Recently, Japan’s government has focused on plans to dissolve parliament and hold elections, which may affect the Yen’s value. The Finance Minister has suggested potential market interventions to counter the Yen’s weakness. The 100-day EMA at 179.28 supports the overall uptrend, while an RSI of 55.75 indicates ongoing bullish momentum.

Role Of The Yen During Turmoil

During market uncertainty, the Yen often becomes a safe haven, attracting investors due to its stability. Political decisions and market interventions from Japan’s authorities greatly impact the Yen’s value. The Bank of Japan’s past currency interventions and policy choices are crucial in influencing how the Yen performs against other currencies. The Yen is also influenced by the difference between US and Japanese bond yields, shaped by the BoJ’s very loose monetary policies. Changes in risk sentiment and global monetary policies continue to drive the Yen’s strength and investor behavior. Right now, with trading around 184.15, the next few weeks will see tension between political uncertainty and central bank policies. The upcoming snap election on February 8 suggests potential Yen weakness in the short term. Traders should consider strategies that could benefit from a move towards the 185.00 resistance level before the election.

Effect Of Sales Tax Suspension On The Yen

The proposal to suspend a sales tax is a key factor, raising worries about Japan’s financial health, especially with a high debt-to-GDP ratio expected to exceed 260% by the end of 2025. This situation supports a weaker Yen, making bullish positions on EUR/JPY appealing. Buying call options with a strike price at or above 185.00 may be a smart way to take advantage of this potential upward trend. However, we must keep in mind the possibility of intervention from Japanese authorities, as their actions in late 2022 to support the Yen are still fresh in our minds. The Bank of Japan has also been gradually stepping away from its ultra-loose policy since 2024, backed by core inflation that has remained above 2% for most of 2025. This fundamental change could unexpectedly strengthen the Yen, so it might be wise to buy put options below the 183.85 support level as a precaution against a sudden drop. Given the mixed market forces, increased volatility seems likely as we approach the election. For those uncertain about the direction, strategies that benefit from larger price movements, like a long straddle, may be suitable. This method allows traders to profit from significant price swings in either direction, which seems more likely than the current sideways trading. From a technical perspective, the price staying above the middle Bollinger Band at 183.85 maintains a positive outlook. A decisive close above 185.00 would confirm the uptrend continuation, while a drop below 183.85 would signal a potential shift in momentum. We should use these levels as crucial triggers for entering or adjusting derivative positions leading up to the February election. Create your live VT Markets account and start trading now.

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