The yen's safe-haven attribute returns, euro bears eye a drop below the 1.75 level

According to information from Zhihui Finance APP, euro/yen bears are eyeing a break below the 175 level, with the yen’s safe-haven status being reactivated as a result. Analysis points out that France’s fiscal and social pressures are exerting continuous downward pressure on the euro, thus strengthening the case for a bullish yen; however, short-term uncertainty surrounding Federal Reserve policy and the US midterm elections casts a shadow over this outlook. One missing piece is the Bank of Japan turning hawkish at its October 30 meeting. Currently, the EUR/JPY exchange rate is fluctuating around 176.

“The international environment may already be convincingly bullish for the yen, but for this view to be fully established, the Bank of Japan would need to confirm a shift to a more hawkish stance before 2027,” said FX strategist Audrey Childe-Freeman in a report.

She added that after a series of recent safe-haven trading days in the market, defensive foreign exchange positions have regained popularity.