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
Top 3 Price Prediction: Bitcoin, Ethereum, Ripple – BTC, ETH and XRP await US NFP for next directional moveBitcoin (BTC), Ethereum (ETH) and Ripple (XRP) extend their weekly gains on Friday as traders await the US Nonfarm Payrolls (NFP) report for the next directional catalyst.
Author  FXStreet
Yesterday 10: 01
Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) extend their weekly gains on Friday as traders await the US Nonfarm Payrolls (NFP) report for the next directional catalyst.
placeholder
Yen hits one-month high on BOJ September-hike bets; AUD/JPY cracks support as carry unwindsUSD/JPY has tumbled from the 160 area to a one-month low near 155.2 in two sessions as Bank of Japan hike bets for the Sept 17-18 meeting intensify. AUD/JPY has broken below 112.7, flagging carry-trade stress. A test of 155.21 - and then 153 - is now in focus.
Author  Suzie
Yesterday 06: 52
USD/JPY has tumbled from the 160 area to a one-month low near 155.2 in two sessions as Bank of Japan hike bets for the Sept 17-18 meeting intensify. AUD/JPY has broken below 112.7, flagging carry-trade stress. A test of 155.21 - and then 153 - is now in focus.
placeholder
Gold rebounds above $4,450 as Waller tempers Fed rate hike bets ahead US jobs dataGold price (XAU/USD) gains momentum to around $4,470 during the early Asian session on Friday. The precious metal extended its recovery as Federal Reserve (Fed) rate hike bets ease. All eyes will be on the US August Nonfarm Payrolls (NFP) report, which is due later on Friday. 
Author  FXStreet
Yesterday 01: 32
Gold price (XAU/USD) gains momentum to around $4,470 during the early Asian session on Friday. The precious metal extended its recovery as Federal Reserve (Fed) rate hike bets ease. All eyes will be on the US August Nonfarm Payrolls (NFP) report, which is due later on Friday. 
placeholder
Gold rebounds past $4,400 as rate-hike odds cool ahead of NFPGold is back above $4,400 after weak ADP data cut September rate-hike odds to ~58%. XAU/USD rebounded from Wednesday's $4,282 low; Friday's NFP is the next catalyst.
Author  Irene Q.
Sep 03, Thu
Gold is back above $4,400 after weak ADP data cut September rate-hike odds to ~58%. XAU/USD rebounded from Wednesday's $4,282 low; Friday's NFP is the next catalyst.
placeholder
US August Nonfarm Payrolls Preview: Will the Labor Market Quell Fed Rate Hike Expectations? US Stocks, Dollar, and Gold Face Key TestThe U.S. Bureau of Labor Statistics will release the August nonfarm payrolls report at 8:30 a.m. ET on September 4. Following hawkish signals delivered by Fed Chair Warsh at Jackson Hole
Author  TradingKey
Sep 03, Thu
The U.S. Bureau of Labor Statistics will release the August nonfarm payrolls report at 8:30 a.m. ET on September 4. Following hawkish signals delivered by Fed Chair Warsh at Jackson Hole
Related Instrument
goTop
quote