[Currency Roundup and Outlook] EUR/JPY: ¥180 defense line breached as Japanese and U.S. authorities fire salvos aimed at curbing yen weakness, with intervention concerns capping gains

Yen selling continued last week against a backdrop of higher oil prices and rising US interest rates, but the market mood changed completely after Japanese and US authorities issued warnings against further yen depreciation. Dollar-yen at one point approached ¥160, but growing concern about intervention triggered a shift to yen buying, pushing euro-yen below the ¥180.00 level and into the first half of the ¥178 range.

The move toward the weekend was particularly pronounced. Remarks by Vice Minister of Finance Mimura and Finance Minister Katayama, along with President Trump's expression of concern, chilled the market. As a result, ¥180, which had been watched as a "red line," shifted from support to resistance, weakening buying momentum.

The upside is expected to remain heavy this week against a backdrop of intervention concerns, with the market expected to move lower, led by selling into rallies around the middle of the ¥179 range. A break below the selling-into-rallies point near ¥1,918 would raise the risk of a move toward the ¥177 range.

Technical analysis shows the ¥180 level undergoing a role reversal, while daily and hourly moving averages have also turned downward. The expected range is ¥177.50 to ¥180.20, with the alternative scenario being renewed yen selling due to worsening Middle East conditions or a renewed rise in oil prices.

Overall, the interest-rate differential between Japan and the United States and remarks from Japanese and US officials are having a major influence on the direction of the yen market. Selling into rallies is likely to remain favored over chasing the upside. The focus ahead will be on whether the market can clearly break above ¥180 and whether the first half of the ¥178 range can generate a rebound.