EUR/JPY has fallen below 183.00, hitting a near three-week low of 181.57. The 14-day Relative Strength Index is at 50.96, showing weak momentum. The main resistance level is at the nine-day EMA of 183.44. On Wednesday, EUR/JPY traded around 182.80, marking its fourth straight session of losses. This decline follows Germany’s Retail Sales report, which indicated a 1.1% increase year-over-year in November. However, monthly sales decreased by 0.6%, worse than the 0.3% drop in October and below the market’s 0.2% growth expectation.

Technical Analysis Overview

In technical analysis, EUR/JPY is above the 50-day EMA but below the nine-day EMA, suggesting possible sideways movement. Support is near the three-week low of 181.57 and further at the 50-day EMA of 181.31. Staying above the 50-day EMA could help maintain a medium-term uptrend. A recovery could push EUR/JPY towards the nine-day EMA at 183.44, possibly reaching the all-time high of 184.95. Currently, the Euro shows weakness against the Japanese Yen, with a daily change of -0.16% against it. Market sentiment remains cautious due to several economic factors. The EUR/JPY pair has shown continued weakness since the end of last year. After dipping below 183.00 in late December 2025, it has now broken below the important 50-day EMA support at 181.31. The pair is now trading around 180.50, indicating a negative short-term trend.

Central Bank Divergence

The downward pressure stems from a growing gap in central bank perspectives becoming evident in early 2026. The European Central Bank is increasingly worried about slowing growth, influenced by weak German retail sales data from November 2025. On the other hand, comments from Bank of Japan officials hint at a possible move away from negative interest rates in the first half of this year, which could strengthen the yen. In the upcoming weeks, traders may want to prepare for further declines or increased volatility. One-month implied volatility in EUR/JPY has risen to 11.5%, up from the 8.2% average in the last quarter of 2025. Buying put options with a strike price around 179.00 could be a smart move to take advantage of this downward trend. Alternatively, if you expect a slower decline or stabilization, consider selling out-of-the-money call spreads. The previous support level of 181.57, the three-week low from December 17, 2025, will likely act as strong resistance now. This strategy allows you to earn premiums while the pair struggles to recover. Create your live VT Markets account and start trading now.

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