EUR/JPY Price Forecast: Softens below 178.00, bearish outlook remains intact under 100-day SMA

The EUR/JPY currency pair experienced mild losses near 177.70 during early European trading hours on Tuesday. Political unrest in France, including riots and looting, contributed to the Euro weakening against the Japanese Yen. Later on Tuesday, Germany's Zew Surveys and the Eurozone will be released, as well as a speech from ECB policymaker José Luis Escrivá. Overnight curfews were imposed in parts of central Paris and other French cities following weekend riots.

For Japan, Bank of Japan (BoJ) policymaker Junko Koeda suggested that there is no need for excessive caution about rate hikes due to substantial upside inflation risks. BoJ Governor Kazuo Ueda stated that underlying inflation is close to the central bank's 2% target, with strong global AI demand adding to inflationary pressure from a tight job market, signaling the possibility of further rate increases.

Societe Generale noted that the recent global bond rout has affected major markets, including bonds like US Treasuries, UK Gilts, German Bunds, and Austrian Government Bonds (OATs).

The Bank of Japan's policy is crucial for the Japanese Yen, which is one of the world's most traded currencies. Traders focus on the Bank of Japan's policy and the differential between Japanese and US bond yields, as well as risk sentiment among investors. The BoJ has intervened in currency markets to lower the Yen's value but refrains from doing so often due to political concerns. The gradual unwinding of ultra-loose monetary policy has supported the Yen's value, narrowing the differentials with other major central banks.