EUR/JPY Rally Gaining Traction: Can Bulls Push Past 185 Resistance?

The EUR/JPY pair sits in consolidation territory around 183.80 as European traders settle into Wednesday’s session. Technical indicators suggest underlying strength, but the road ahead hinges on whether buyers can decisively break through the 185.00 level—a barrier that has drawn keen attention from market participants.

Central Bank Divergence Fueling the Move

Recent policy signals reveal a widening gap between monetary authorities. The Bank of Japan signaled in its December “Summary of Opinions” that board members remain committed to tightening, with rate hikes potentially lined up for 2026. This hawkish tone initially supported the Japanese Yen. However, the BoJ’s measured approach—described by some as overly cautious—has tempered JPY gains, as markets question the conviction behind further tightening.

Meanwhile, the European Central Bank kept rates on hold in December and suggested an extended pause ahead. Money markets are now pricing roughly a 25 basis point rate cut from the ECB by February 2026, keeping eurozone rate expectations subdued. This policy divergence creates an interesting dynamic: while the BoJ leans hawkish, the ECB leans dovish, yet the EUR/JPY remains resilient.

Technical Picture Points Higher

On the daily timeframe, EUR/JPY maintains a clear uptrend, with the 100-day exponential moving average at 177.80 providing solid support underneath. This level acts as a floor—as long as pullbacks respect it, bulls retain control of the trend.

Price action has climbed toward the upper Bollinger Band near 185.25, sitting just shy of the psychologically important 185.00 mark. The bands themselves are widening and sloping upward, a classic signal of strengthening bullish pressure. The Relative Strength Index (RSI) reads 61.05 and is creeping higher from 60.87, confirming positive momentum while staying clear of overbought extremes.

Key Technical Levels to Watch

Resistance: The upper Bollinger Band at 185.25 marks the immediate ceiling. A daily close above this zone would likely trigger follow-through buying toward fresh highs.

Support: The middle Bollinger Band sits at 182.95, offering an intermediate cushion. Below that, the lower band at 180.65 provides a deeper safety net aligned with the broader uptrend.

The setup suggests traders should monitor whether EUR/JPY can convincingly close above the 185 resistance. Success here keeps the rally alive, while rejection could force consolidation back toward the 183 region and test market commitment to further gains.

Note: Trading decisions should incorporate risk management and individual market conditions. This analysis reflects technical positioning as of the current session.