EUR/JPY struggles near mid-155.00s, lowest since August ahead of BoJ meeting this week

Source Fxstreet
  • EUR/JPY drifts lower for the second straight day and drops to over a one-month low.
  • Hawkish BoJ expectations continue to underpin the JPY and exert downward pressure.
  • The Euro draws support from a weaker USD and should limit losses ahead of the BoJ. 

The EUR/JPY cross attracts sellers for the second straight day on Monday and drops to its lowest level since early August, below mid-155.00s during the Asian session. The downtick is sponsored by the underlying bullish sentiment surrounding the Japanese Yen (JPY), though lacks follow-through buying ahead of the crucial Bank of Japan (BoJ) policy meeting later this week. 

The recent hawkish signals from the Bank of Japan (BoJ) officials suggested that the central bank will raise interest rates further by the end of this year, which, in turn, is seen underpinning the JPY and exerting pressure on the EUR/JPY cross. In fact, BoJ board member Junko Nakagawa said earlier last week that the central bank will raise interest rates further if the economy and inflation move in line with its forecasts. Furthermore, BoJ board member Naoki Tamura said last Thursday that the central bank must push up short-term rates to at least around 1% through fiscal 2026 to stably achieve the 2% inflation target.

This marks a big divergence in comparison to the European Central Bank's (ECB) decision last week to cut interest rates for the second time this cycle and indicates a declining path for borrowing costs in the months ahead. This is seen as another factor behind the shared currency's relative underperformance and contributes to the offered tone surrounding the EUR/JPY cross. That said, reports that the ECB  policymakers see an interest rate cut in October as unlikely, barring a major deterioration in the outlook for growth, along with sustained US Dollar (USD), assist the Euro in gaining some positive traction.

Apart from this, a generally positive tone across the global equity markets keeps a lid on any further appreciation for the safe-haven JPY and should cap the upside for the EUR/JPY cross. Traders might also refrain from placing aggressive bearish bets and opt to move to the sidelines ahead of the key central bank event risk – the highly-anticipated BoJ policy decision on Friday. The key focus will be on the BoJ's policy outlook, which will play a key role in influencing the near-term JPY price dynamics and help market participants in determining the next leg of a directional move for the currency.

Economic Indicator

BoJ Interest Rate Decision

The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.

Read more.

Next release: Fri Sep 20, 2024 03:00

Frequency: Irregular

Consensus: -

Previous: 0.15%

Source: Bank of Japan

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Natural Gas sinks to pivotal level as China’s demand slumpsNatural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
Author  FXStreet
Jul 01, 2024
Natural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
placeholder
ECB Policy Outlook for 2026: What It Could Mean for the Euro’s Next MoveWith the ECB likely holding rates steady at 2.15% and the Fed potentially extending cuts into 2026, EUR/USD may test 1.20 if Eurozone growth proves resilient, but weaker growth and an ECB pivot could pull the pair back toward 1.13 and potentially 1.10.
Author  Mitrade
Dec 26, 2025
With the ECB likely holding rates steady at 2.15% and the Fed potentially extending cuts into 2026, EUR/USD may test 1.20 if Eurozone growth proves resilient, but weaker growth and an ECB pivot could pull the pair back toward 1.13 and potentially 1.10.
placeholder
Gold slumps below $4,800 on renewed Strait of Hormuz tensions Gold price (XAU/USD) slumps to around $4,775 during the early Asian session on Monday. Traders digest renewed tensions between the United States (US) and Iran over the critical Strait of Hormuz.
Author  FXStreet
Yesterday 01: 40
Gold price (XAU/USD) slumps to around $4,775 during the early Asian session on Monday. Traders digest renewed tensions between the United States (US) and Iran over the critical Strait of Hormuz.
placeholder
U.S.-Iran Standoff Suddenly Escalates Over Weekend, Crude Jumps 8% at Monday OpenOver the weekend, the U.S. and Iran engaged in a new round of maneuvering over the situation in the Middle East, leading to a rapid escalation in geopolitical risks. As a result, internat
Author  TradingKey
Yesterday 02: 37
Over the weekend, the U.S. and Iran engaged in a new round of maneuvering over the situation in the Middle East, leading to a rapid escalation in geopolitical risks. As a result, internat
placeholder
Gold holds steady above $4,800 amid US-Iran ceasefire uncertainty Gold price (XAU/USD) trades on a flat note near $4,825 during the early Asian session on Tuesday. The precious metal steadies amid renewed geopolitical instability in the Middle East.  
Author  FXStreet
2 hours ago
Gold price (XAU/USD) trades on a flat note near $4,825 during the early Asian session on Tuesday. The precious metal steadies amid renewed geopolitical instability in the Middle East.  
Related Instrument
goTop
quote