EUR/JPY Falls as Intervention Risks and US-Iran Talks Dominate Markets
The EUR/JPY cross is trading in negative territory around 181.70 during early European trading hours on Wednesday, as the Japanese Yen strengthens against the Euro. This move comes amid concerns over potential intervention from Japanese authorities following a coordinated effort with the US.
Traders are closely monitoring developments surrounding US-Iran talks, particularly an interim deal to reopen the Strait of Hormuz. According to Axios, the US, Iran, and Oman are closing in on an agreement that would set up a 60-day temporary arrangement between Oman and Iran in the critical waterway.
Fresh optimism over the Middle East could improve risk sentiment and provide support to the EUR against the JPY. Societe Generale analysts argue that Japan's growth prospects, rather than faster Bank of Japan (BoJ) hikes, are key to the Yen's outlook. They stress that policy rate changes alone will not deliver a sustained recovery in the Yen.
A technical analysis shows a bearish near-term tone for EUR/JPY, with spot holding below the 20-day SMA and Bollinger Bands acting as resistance overhead. The Relative Strength Index (14) is at 34.77, close to oversold territory, indicating downside pressure but potentially approaching a fatigue zone.