EUR/JPY edged up roughly 0.14% during Thursday's Asian session, trading near 177.15 and recovering part of the previous session's losses.

Although Japan released stronger-than-expected current account data, the yen failed to gain any meaningful boost, reflecting that near-term currency moves remain driven by monetary policy expectations, market risk appetite, and the euro's own fundamentals.

The euro has temporarily found technical rebound momentum, but with France's fiscal problems unresolved, further upside for the pair remains uncertain.

Japan's fiscal data came in better than market expectations.

Japan's August current account surplus rose to 406.2 billion yen, beating the market forecast of 319.4 billion yen and surpassing the previous reading of 298.8 billion yen.

A widening current account surplus typically signals an improvement in a country's external balance position and can provide some fundamental support for its currency.

However, the positive data did not immediately translate into yen appreciation, indicating that investors are currently more focused on interest rate differentials, capital flows, and the Bank of Japan's upcoming policy actions.

On the monetary policy front, hawkish signals within the Bank of Japan warrant attention.

BOJ policy board member Ayano Sato previously expressed support for a phased approach to raising interest rates.

This stance helps strengthen market confidence that the BOJ will gradually exit its accommodative policy.

If Japan's inflation and wage growth can maintain some resilience, the likelihood of further rate hikes by the BOJ may increase, thereby narrowing the interest rate differential between Japan and other major economies and providing medium-term support for the yen.

However, a hawkish policy stance does not guarantee immediate yen strength.

Markets typically price in rate hike expectations in advance, and actual currency performance also depends on the pace and magnitude of policy adjustments as well as the rate paths of other major central banks.

If the BOJ raises rates more slowly than market expectations while overseas rates remain elevated, the yen could still be weighed down by carry trades.

The current coexistence of improved Japanese current account data and short-term yen weakness precisely illustrates that fundamental data and capital pricing are not always synchronized.

On the euro side, France's fiscal outlook remains a key factor limiting its performance.

In recent weeks, French government bonds have faced significant selling pressure, with growing market concerns over the scale of France's public debt, fiscal deficit, and political stability.

Falling bond prices are typically accompanied by rising yields, but if the yield increase reflects an expanding fiscal risk premium rather than an improving economic outlook, it may not provide sustained support for the euro.

On the contrary, investors may reduce their willingness to allocate to euro-denominated assets due to concerns about France's fiscal sustainability.

The controversy surrounding France's budget has further amplified market uncertainty.

French politician Marine Le Pen has proposed a plan to cut spending by approximately 140 billion euros annually, attempting to address fiscal pressures.

However, the market remains skeptical about whether the minority government can successfully push the budget through parliament.

Even if an agreement is eventually reached, spending cuts could face political and public opposition, with implementation facing obstacles.

Analysts at Nomura Securities noted that the French budget plan aims to reduce the fiscal deficit as a share of GDP from an estimated 5.4% this year to 5.0% by 2027, but even this relatively modest improvement could be constrained by political resistance and social opposition.

French Prime Minister Sébastien Lecornu may push the budget through by compromising with opposition parties or invoking Article 49.3 of the French Constitution, but even if the budget passes, it does not mean political risks will quickly dissipate.

As the 2027 French presidential election approaches, markets may continue to demand higher risk compensation for French assets.

This means the euro's short-term rebound still lacks sufficiently solid fundamental support.

French fiscal risks could transmit to the euro exchange rate through the government bond market, while a potential BOJ rate hike could gradually improve the yen's interest rate differential environment.

The interaction of these two forces will be an important determinant of EUR/JPY's subsequent trajectory.

From a cross-rate perspective, EUR/JPY depends not only on how the euro and yen each perform against the dollar, but also reflects changes in relative policy expectations between the two currencies.

If French fiscal concerns intensify further, the euro could come under pressure; if the BOJ sends clearer rate hike signals, the yen could also find support.

Conversely, if French budget negotiations make progress, market risk appetite improves, and the BOJ maintains gradual policy adjustments, EUR/JPY could continue to find opportunities for periodic rebounds.

From a daily chart structure, EUR/JPY rebounded to near 177.15 on Thursday, temporarily repairing part of the previous session's decline, but a single-day gain is not sufficient to confirm a trend reversal.

The available market data lacks complete moving averages, relative strength index, and recent highs and lows, so it is not appropriate to directly set unverified specific technical support and resistance levels.

In the short term, the key focus should be on whether the pair can sustain its rebound and re-establish itself above the price zone breached in the previous session; if the rebound lacks staying power and prices weaken again, it may indicate that earlier downward pressure has not yet subsided.

If a higher low subsequently forms and short-term rebound highs continue to be broken, it would help improve the daily chart structure.

From a 4-hour chart structure, the pair has shown repair after a clear decline in the previous session, and short-term bullish and bearish forces may be entering a rebalancing phase.

If prices can hold above the 177.00 area and gradually break through recent rebound highs, short-term rebound momentum may continue; if the pair falls back below 177.00 and continues to weaken, caution is warranted regarding a failed rebound and a potential retest of previous lows.

Given the lack of sufficient short-cycle indicators and specific price structure data, it is currently more appropriate to base judgments on actual breakouts, pullback confirmations, and high-low changes rather than simply following longs on the basis of a single rebound.

On the fundamental front, French fiscal news and BOJ policy expectations could still trigger significant volatility, and technical signals need to be validated against relevant news.

In summary, EUR/JPY currently presents a pattern of short-term rebound coexisting with medium-term uncertainty.

Japan's August current account surplus came in above expectations, but the yen has temporarily failed to gain meaningful support from the positive data; the BOJ's internal hawkish stance provides potential medium-term support for the yen.

On the euro side, France's fiscal deficit, budget negotiations, and political risk premium remain the primary sources of pressure, and even if the budget is eventually passed, it may not quickly dispel market doubts.

Going forward, key attention should be paid to the progress of French budget negotiations, BOJ rate hike signals, and EUR/JPY's short-term price structure.

If French fiscal risks continue to escalate, or if the BOJ further strengthens rate hike expectations, the pair could come under renewed pressure; if France's political situation stabilizes and risk appetite improves, EUR/JPY could extend its technical rebound.