Date: 5th March 2026.
EURJPY Under Pressure as Yen Gains Safe-Haven Demand.
The global currency market today witnessed significant turmoil in the EURJPY pair. Trading above 182.00, the pair recorded a daily decline of 0.24%. Although the euro has strengthened 14.19% cumulatively over the past 12 months against the yen, short-term momentum is showing signs of exhaustion, with a correction of 1.83% over the past four weeks.
This movement reflects the tug-of-war between strong domestic economic data in Europe and the yen's role as a safe-haven amidst escalating conflicts in the Middle East.
European Economic Resilience and the Challenge of Disinflation
In the Eurozone, recent economic data has provided complex mixed signals for the European Central Bank (ECB). Germany, the region's economic engine, performed solidly, with the HCOB Services PMI surging to 53.5 in February. Collectively, the Eurozone composite index reached a three-month high, signaling a faster-than-expected output acceleration at the start of the year.
However, this growth was accompanied by a return of inflationary pressures. Core HICP data surged to 2.4% year-on-year, exceeding market expectations and the previous month's figure. This condition has forced market participants to drastically revise their monetary policy expectations. While last week, interest rate cuts were still the main topic of discussion, the market now estimates a 40% probability of the ECB raising rates before the end of the year.
Japanese Yen: Taking Refuge Amid Geopolitical Uncertainty
On the other hand, the Japanese Yen has received strong support from its status as a hedge. Military escalation in the Middle East, including reports of direct US involvement in the conflict with Iran, has prompted investors to shift to the Yen. Although Finance Minister Satsuki Katayama stated that he was monitoring the Yen's decline with ‘high urgency’ and left open the possibility of intervention, geopolitical pressures have instead given the Japanese currency a boost, strengthening below 157 per dollar.
Bank of Japan (BoJ) Governor Kazuo Ueda, in his statement to parliament, emphasized that while the path to interest rate normalization remains open, external factors such as global conflicts could have a material impact on Japan's domestic economy. Nevertheless, market expectations for a BoJ interest rate hike in April remain stable at 15 basis points, signaling investor confidence that the era of low interest rates in Japan is coming to an end.
Technical Projection and Market Direction
Technically, the intraday bias for EURJPY is currently neutral, with a focus on two key levels.
In a bullish scenario, a break above 184.76 would open the way to 186.22, which, if surpassed, would confirm the continuation of the long-term uptrend. Conversely, in a bearish scenario, if the pair breaks through strong support at 180.79, this would signal that the current decline is not merely a short-term fluctuation, but rather a major correction of the long rally that began at 154.77, turning the medium-term outlook negative.
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Please note that times displayed based on local time zone and are from time of writing this report.
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Ady Phangestu
HFMarkets
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