Introduction

EUR/JPY continues to trend higher, supported by a powerful confluence of macro fundamentals, yield divergence, and clean technical structure. The euro remains under modest pressure from soft growth, but the yen’s far weaker backdrop, combined with entrenched Bank of Japan dovishness, sustains a decisive bullish bias. With sentiment firm and technical indicators reinforcing the trend, EUR/JPY remains one of the most structurally attractive trades in the major FX complex. This article evaluates the key drivers and outlines why momentum continues to favour further upside.

Fundamental Analysis

Eurozone fundamentals remain subdued, marked by sluggish GDP growth, soft labour markets and a cautious ECB. However, inflation moderation will likely keep policy steady, preventing any sharp repricing lower. Although not a fundamentally strong currency on its own, the euro benefits from stability rather than strength.

Japan’s macro profile is significantly weaker. Growth remains fragile, inflation is minimal, and the BoJ continues to hold rates near zero despite global tightening cycles. Yield spreads overwhelmingly favour euro-denominated assets, making EUR/JPY structurally bid on a relative basis. Japan’s persistent fiscal and trade challenges further weaken the yen’s position, reinforcing long EUR/JPY positioning.

The overarching macro theme remains unchanged: the euro is “less weak” than the yen, and interest-rate differentials continue to work decisively in EUR/JPY’s favour.

Sentiment Analysis

Market sentiment aligns strongly with the fundamental view. COT positioning shows sustained demand for EUR/JPY upside exposure, while retail traders remain short the rally—supporting continuation. Geopolitical risks have eased and global risk appetite remains steady, limiting defensive flows into JPY. Momentum indicators remain bullish and trend-following systems continue to signal accumulation rather than distribution.

With no catalyst for meaningful yen strength, sentiment remains a tailwind for EUR/JPY.

Technical Analysis

EUR/JPY’s technical structure is one of the cleanest in the G10 space. Price sits well above the Ichimoku cloud, indicating a strong, established uptrend. The Tenkan remains above the Kijun, and the Lagging Span confirms trend integrity by staying above both price and cloud.

Momentum remains healthy:

• RSI sits around 60, indicating bullish strength without overbought conditions.
• MACD remains above the signal line and the zero axis, maintaining constructive momentum.
• Pullbacks remain shallow and orderly, respecting key dynamic support levels.

Volume is stable, with no signs of topping or distribution. The forward cloud thickens, providing additional confirmation that the trend has structural depth.

The technical picture points clearly toward continuation unless price breaks below the Kijun and into the cloud—currently not indicated.

Conclusion

The EUR/JPY long remains a high-conviction macro and technical trade. Yield spreads, sentiment and price structure all align in favour of further upside. While the euro is not fundamentally strong, the yen’s macro vulnerability and entrenched BoJ dovishness create a persistent directional bias. With a clean uptrend and supportive momentum indicators, EUR/JPY retains a robust bullish outlook in both the near and medium term.