EUR/JPY Price Forecast: Declines below 181.50 with emerging oversold RSI

The EUR/JPY cross trades in negative territory around 181.20 during the early European trading hours on Monday. The Japanese Yen (JPY) strengthens against the Euro (EUR) as Japanese official projected a Bank of Japan (BoJ) rate hike this month.

Japanese Prime Minister Sanae Takaichi's economic adviser, Takuji Aida, said on Monday that the BoJ is expected to raise interest rates in September and keep hiking at a pace of once every quarter until January next year. 

“After the September rate hike, the BOJ will likely follow up with another increase by January next year,” said Aida. "After that, the BOJ will revert to a hike of around once every six months,” Aida added. 

Traders brace for the European Central Bank (ECB) interest rate decision on Thursday. The ECB is likely to raise interest rates at its upcoming policy meeting, which would bring its deposit rate by a quarter-point to 2.50%, according to a Reuters poll published on Thursday.

Japan data calendar in focus as Deutsche Bank tracks wages and prices

According to Deutsche Bank, the Japan data calendar is set to be busy next week, with attention on a series of releases that will help gauge domestic momentum. The bank highlights that “in Japan, Tuesday’s releases include July labour cash earnings (Tuesday) as well as August Economy Watchers survey (Tuesday) and the PPI (Friday),” underscoring the focus on both household income dynamics and upstream price pressures as investors assess the evolving macro backdrop.

Technical Analysis: EUR/JPY keeps a bearish vibe, with emerging oversold RSI momentum

In the daily chart, EUR/JPY holds in a clear bearish near-term bias as price sits below the 20-day Bollinger middle band and the 100-day moving average, keeping the broader structure capped after the recent slide. The Relative Strength Index (14) hovers just above the 30 area, hinting at emerging oversold conditions but not yet signaling a decisive loss of downside momentum.

On the topside, initial resistance aligns with the lower Bollinger band near 181.40, a level now acting as immediate overhead supply after being breached. The next hurdle to watch is the August 10 low of 182.70, en route to the 20-day simple moving average around 184.45 and the 100-day moving average at 184.90 forming a dense resistance zone above. 

On the downside, the September 4 low of 180.23 acts as an initial support level for the cross. The next contention level is located at the 180.00 psychological level. Any follow-through selling below this level could expose the August 3 low of 179.37.