Bearish Outlook on EurjpyA bearish outlook on EUR/JPY (Euro/Japanese Yen) typically stems from either Euro weakness, Yen strength, or a combination of both. Here are several current or general themes that could support a bearish bias:
1. Risk-Off Sentiment (Yen Strength)
The Japanese Yen is a safe-haven currency, which tends to strengthen during global risk aversion (e.g., geopolitical tensions, stock market declines, or economic uncertainty).
If equities fall or global sentiment sours, JPY demand can rise, pushing EUR/JPY lower.
2. ECB Dovishness (Euro Weakness)
If the European Central Bank (ECB) signals or enacts rate cuts, this weakens the Euro.
For instance, recent soft Eurozone inflation or poor economic data may prompt ECB easing, lowering EUR/JPY.
3. BOJ Policy Normalization (JPY Strength)
If the Bank of Japan (BOJ) continues shifting away from ultra-loose monetary policy (e.g., exiting negative rates, allowing JGB yields to rise), this could strengthen the Yen.
Any hawkish surprise from the BOJ is typically JPY-positive.
4. Technical Setup
On the charts, if EUR/JPY is failing at resistance (e.g., near a long-term high or a fib retracement), or showing bearish divergence on RSI/MACD, it could signal a top.
A break below key support zones (e.g., 160.00 or 158.00) might accelerate downside momentum.
5. Positioning and Sentiment
If traders are heavily long EUR/JPY (crowded trade), a reversal or sharp correction is more likely if sentiment shifts.
