EUR/JPY steadies near 176.00 as Japan’s stimulus and BoJ-ECB divergence weigh

• EUR/JPY holds steady above 176.00 as traders weigh Japan’s stimulus plans and central bank divergence.
• Reuters poll shows 60% expect BoJ to raise rates to 0.75% in Q4, 96% by end-Q1 2026.
• ECB expected to hold rates at 2.00% until at least 2027 as inflation steadies near 2%.

The Euro (EUR) steadies against the Japanese Yen (JPY) on Wednesday, trading around 176.26 after snapping a four-day losing streak on Tuesday. The pair is struggling to build momentum, as investors weigh Japan’s incoming fiscal stimulus and diverging central-bank outlooks between the Bank of Japan (BoJ) and the European Central Bank (ECB).

According to Reuters sources, Japan’s new Prime Minister Sanae Takaichi is preparing an economic stimulus package larger than last year’s ¥13.9 trillion, worth about 92 billion dollars, to ease inflation pressures and boost household spending. The plan will reportedly include fuel-tax cuts, energy subsidies, and investment in strategic industries such as AI and semiconductors. While the fiscal boost underscores Tokyo’s pro-growth stance, 65% of economists in a Reuters poll voiced concerns over Japan’s deteriorating fiscal health.

Earlier on Wednesday, Japan’s Economics Minister Minoru Kiuchi said the government will continue supporting the economy until wage growth strengthens, citing weak household consumption and persistent inflation. He added that authorities are watching the impact of U.S. tariffs and will coordinate closely with the Bank of Japan to achieve stable inflation near 2%.

Despite the prospect of massive government spending, a separate Reuters poll released on Wednesday showed that the BoJ is expected to continue tightening policy. About 60% of economists foresee a rate hike to 0.75% in Q4, while 96% expect that level to be reached by the end of Q1 next year. Moreover, 67% believe Takaichi’s expansionary policies will not delay the BoJ’s rate path, suggesting the central bank remains focused on normalizing policy after decades of ultra-loose conditions. The next BoJ policy meeting is set for October 29-30.

On the European side, the latest Reuters poll indicated that the ECB is expected to keep rates unchanged at 2.00% until at least 2027, as inflation stabilizes near target and growth remains modest. The survey showed economists forecasting Eurozone GDP growth of 1.2% in 2025 and inflation averaging 2.2%, implying that the central bank sees little need for further easing. The ECB will deliver its next policy decision on October 30, just one day after the BoJ meeting.