EURJPY – 03/12/2025

Published by - December 3, 2025 - Fundamental, Technical and Strategic Analysis

Fundamental / Economic Backdrop (short term)

EUR/JPY remains primarily driven by monetary-policy divergence and risk sentiment, with both currencies reacting to different macro forces:

  • The Euro (EUR) is influenced by:

    • Expectations around ECB policy normalization vs. cautious easing, depending on inflation persistence and growth stabilization in the euro area.

    • Slower but stabilizing euro-area growth keeps the euro fundamentally supported but capped.

    • Risk-on market conditions generally support EUR through carry and equity-linked flows.

  • The Japanese Yen (JPY) is being driven by:

    • Bank of Japan (BoJ) normalization expectations, following gradual policy shifts away from extreme accommodation.

    • Rising Japanese yields relative to past cycles, improving JPY’s structural appeal.

    • Strong reaction to risk-off market conditions, where JPY attracts defensive flows.

  • Global risk sentiment remains a key transmission mechanism:

    • Risk-on → EUR/JPY strength via carry/risk flows.

    • Risk-off → JPY outperformance and downside pressure on EUR/JPY.

Fundamental / Economic verdict

Short-term fundamentals are neutral-to-slightly bearish for EUR/JPY.
The euro remains supported by carry demand, but BoJ normalization expectations and defensive JPY demand limit upside. Without a strong risk-on impulse, EUR/JPY remains vulnerable to pullbacks rather than sustained upside continuation.

Technical and Market Sentiment (short term)

EUR/JPY remains technically elevated but losing upside momentum, with price reacting closely to well-defined structural zones.

Key Technical Zones (Short-Term Reference Framework)

Zone Type Price Area (Indicative) Technical Significance
Major Resistance 183.50 – 184.20 Prior breakout zone, supply cluster
Upper Resistance 185.00 – 186.20 Extension zone / volatility expansion
Mid-Range Pivot 181.80 – 182.30 Balance zone / intraday magnet
First Support 180.40 – 179.90 Structure support / short-term demand
Lower Support 178.80 – 177.90 Breakdown trigger / range floor

  • Momentum: Slowing on intraday and 4H timeframes.

  • Structure: Higher-timeframe trend remains constructive, but price is compressing.

  • Market Sentiment: Cautious; participation favors reactive trading at key levels rather than directional chasing.

Technical verdict

EUR/JPY is in a high-level consolidation beneath resistance.
Bias is neutral-to-mildly bearish intraday while price remains below the 183.50–184.20 resistance band. A sustained move below 180.00 would materially weaken short-term structure.

Strategy (short term)

Intraday / Early Week (Thursday 4 December 2025) – Setup and Trade Ideas

Scenario Market Condition Trade Structure
Range / Rotation (Base Case) Price stabilizes between support & resistance • Buy near 180.40–179.90, target 182.00–182.40, stop below 179.40
• Sell near 183.20–184.00, target 181.40–180.20, stop above 184.60
Bearish Breakdown Risk-off sentiment or BoJ-driven JPY strength • Sell break below 179.80, target 178.40 → 177.90, stop above 180.60
Bullish Extension (Lower Probability) Risk-on surge, euro yield support • Buy break above 184.30, target 185.40–186.20, stop below 183.40

Intraday focus:

  • Resistance reaction trades favored while below 184.00

  • Breakdown trades favored on sustained acceptance below 180.00

Base Case & Risk Managed Outlook

  • Expected behavior: Sideways to mildly corrective

  • Probable operating range: 180.00 – 184.00

  • Preferred execution style:

    • Sell rallies into resistance

    • Buy only at confirmed demand zones

  • Directional exposure should remain moderate, given compression and event-sensitivity.

5 Day Outlook Scenarios

Scenario Approx. Probability Expected 5-Day Range Structural Bias
Base – Range / Rotation ~50% 179.50 – 184.20 Market balance under major resistance
Bearish – JPY Strength / Risk-Off ~30% 176.80 – 180.50 BoJ normalization, defensive JPY flows
Bullish – Risk-On Breakout ~20% 184.20 – 187.00 Carry re-engagement, euro inflows

Scenario Interpretation

  • Base Scenario: EUR/JPY oscillates between support and resistance with fading momentum.

  • Bearish Scenario: JPY re-pricing accelerates downside below 180.00.

  • Bullish Scenario: Requires sustained risk-on sentiment and euro-yield support to clear 184.20 with acceptance.

Summary Outlook

  • Fundamentals: Neutral-to-slightly bearish

  • Technical Structure: Compression under resistance

  • Short-Term Bias: Range to corrective

  • Preferred Tactics: Sell rallies, react at support, avoid chasing breakouts without confirmation

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