EUR/JPY 2025: The Yen Recovers Its Safe-Haven Role, Where to Buy?

The EUR/JPY pair has entered a critical inflection point in 2025. After years dominated by carry trade, changing monetary policies are completely redefining the dynamics between the euro and the yen. Today we analyze what to expect from the EUR/JPY change in the coming months and when it is truly the right time to buy yen.

The Shakeup of 2025: Eight Yen in Four Months

The cross has experienced excessive volatility. It started January near 161.7 ¥/€, plummeted to 155.6 ¥ in February due to fears of tariffs, rebounded to 164.2 ¥ in May, and is currently around 163.4 ¥. This rollercoaster responds to five key catalysts that have reconfigured the market:

First hit: The Bank of Japan raises its rate from 0.25% to 0.50% in January — the highest level since 2008 —. The yen immediately rallied but quickly lost momentum because European yields remained well above.

Second factor: US tariffs spike safe-haven demand. Washington announced a 10% general tariff and 20% for EU goods. The trade panic sent capital into the yen, pushing EUR/JPY down to its low of 155.6 ¥.

Third lever: The yen is Asia’s most liquid refuge. Japan is a global net creditor, not dependent on external financing. Additionally, carry trade acts as an amplifier: when crisis hits, investors close yen positions (borrow yen → buy profitable assets). When reversing, they buy yen massively, boosting its value.

Fourth reason: The ECB cuts rates three times (January, March, April), lowering from 4% to 2.25%. Each cut has slowed euro rebounds.

Fifth cause: China’s May monetary stimulus reactivates risk appetite. Beijing injected liquidity and Asian markets rallied. Investors stopped buying yen, and the pair rose to 164.2 ¥.

Why Does the EUR/JPY Change Now Dominate the Rate Differential?

The key is simple: the euro is losing its yield support while the yen regains its.

The Bank of Japan plans to raise its benchmark rate to 0.75% in summer and to 1% in fall. Each hike erodes carry trade: if you borrow yen at higher rates, it’s no longer profitable to finance in that currency to buy European or global assets. Less yen supply = structurally stronger yen.

In the eurozone, the opposite occurs. With inflation falling and growth slowed by tariffs, the ECB will likely raise rates to 2% before year-end. The EUR/JPY yield differential will narrow from two percentage points to just over one. That margin no longer justifies moving capital to the euro when the global climate becomes unstable.

Result: the EUR/JPY change will enter a wide range but with a downward bias in the long term.

Technical Perspective: Buy Signal Pauses

The daily chart shows a moderate bullish bias that is losing traction:

• Price trades above the moving average (≈161 ¥), confirming an uptrend since March
• Narrow-bodied candles clustered at the upper edge of the Bollinger band (upper band 164.0; average 162.5) = lack of additional buying energy
• RSI at 56 after touching 67 a week ago: the oscillator is leaving overbought territory and shows bearish divergence with the May 1 high
• Narrow Bollinger channel: classic precursor to a sharp move when it expands

Supports: Bollinger middle at 162.5; confluence of lower band + moving average ≈ 161 ¥. Breaking 161 opens the door to 159.8-160 ¥.

Resistances: Yearly high at 164.2 ¥; a clear close above encourages a move toward 166-168 ¥.

Where to Buy Yen: Practical Strategies

Short-term (3-6 months)

The cross has fluctuated since January in the 160-170 ¥ range. Every time it hits 165-170 ¥, it makes sense to sell euros and buy yen with targets at 162 ¥ and disciplined stops above 171 ¥. Bank of Japan meetings generate oscillations of one or two yen; active traders can take advantage with small derivatives.

Medium-term (year-end 2025)

Investment bank forecasts converge at 160-170 ¥, while optimistic algorithmic models reach 170-173 ¥. Prudent tactics:

• Accumulate yen in tranches: buy whenever EUR/JPY exceeds 163-164 ¥ to average the price
• Those needing euro flow hedges can set forwards near current levels; costs decrease as the rate differential narrows
• Take profits if the cross falls to 160-162 ¥ after the Bank of Japan’s expected hikes in summer/fall, leaving part of the position as protection against geopolitical shocks

Risks and Alternative Scenarios

Bullish risks for EUR/JPY:

• Unexpected pause by the Bank of Japan if inflation subsides
• Rebound in European core inflation that halts ECB rate cuts
• Prolonged stock rally reactivating carry trade → pair returns to 170+ ¥

Bearish risks (favorable to yen):

• New US-EU tariff round sparks risk aversion
• Stock correction or geopolitical volatility → yen as refuge pressures EUR/JPY to 158-160 ¥

Maintaining clear stops and reviewing exposure after each central bank meeting is essential.

2025 Outlook: Carry Trade Is No Longer a One-Way Street

Year-end projections place EUR/JPY in the 158-170 ¥ range, with a particular convergence around 160-165 ¥. The structural bias has turned favorable to the yen for the first time in two decades.

For the first time in nearly two decades, the EUR/JPY change reflects that carry trade is no longer automatically profitable. A year ago, the rate differential was around two points; now it falls just over one. That means the classic incentive to finance in cheap yen to buy euros has disappeared.

Investor conclusion: 2025 offers the first window in years to build yen positions with a reasonable expectation of moderate appreciation. During rebounds toward 165-170 ¥, it’s advisable to buy, targeting 160-162 ¥ as objectives and maintaining risk controls at 171 ¥. The main risk is that the Bank of Japan halts its hikes or European inflation rebounds, but the medium-term trend favors the yen against the euro.