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
Should You Buy Bitcoin Now or Buy Tesla Which Holds Bitcoin? In 2026, Bitcoin (BTC) suffered a Waterloo-style sell-off, with prices quickly retreating to around $60,000 from a period high of nearly $98,000 at the start of the year. Bitcoin is once
Author  TradingKey
6 hours ago
In 2026, Bitcoin (BTC) suffered a Waterloo-style sell-off, with prices quickly retreating to around $60,000 from a period high of nearly $98,000 at the start of the year. Bitcoin is once
placeholder
Financial Markets 2026: Volatility Catalysts in Gold, Silver, Oil, and Blue-Chip Stocks—A CFD Trader's OutlookThe financial world is perpetually in motion, but the landscape for 2026 seems to be shaping up to be particularly dynamic. For CFD traders navigating global markets, this heightened volatility could present a distinctive set of challenges and opportunities.
Author  Rachel Weiss
7 hours ago
The financial world is perpetually in motion, but the landscape for 2026 seems to be shaping up to be particularly dynamic. For CFD traders navigating global markets, this heightened volatility could present a distinctive set of challenges and opportunities.
placeholder
Gold climbs to $5,050 as Fed-driven USD weakness offsets positive risk tone ahead of US NFPGold (XAU/USD) attracts some dip-buyers following the previous day's modest slide and climbs back above the $5,050 level during the Asian session on Wednesday.
Author  FXStreet
12 hours ago
Gold (XAU/USD) attracts some dip-buyers following the previous day's modest slide and climbs back above the $5,050 level during the Asian session on Wednesday.
placeholder
Bitcoin’s ‘2022 Redux’ Fears Are Superficial, Argues TexasWest Capital CEOTexasWest Capital CEO Christopher Inks argues Bitcoin's drop is a completed "degrossing" event, structurally distinct from the 2022 Terra-induced collapse.
Author  Mitrade
13 hours ago
TexasWest Capital CEO Christopher Inks argues Bitcoin's drop is a completed "degrossing" event, structurally distinct from the 2022 Terra-induced collapse.
placeholder
Is the Crypto Rally Dead? Why Bernstein Still Predicts a $150K Bitcoin Peak Despite Waller’s WarningsFed Governor Waller claims the crypto craze has faded, while Bernstein backs Bitcoin to reach $150,000 this year.On Tuesday (February 10), the cryptocurrency market remained sluggish; wit
Author  TradingKey
Yesterday 10: 37
Fed Governor Waller claims the crypto craze has faded, while Bernstein backs Bitcoin to reach $150,000 this year.On Tuesday (February 10), the cryptocurrency market remained sluggish; wit
Related Instrument
goTop
quote