The EUR/JPY pair is poised for continued upward momentum, targeting the 166.00 level as the Japanese Yen remains under pressure. Consolidating near multi-year highs, the cross is expected to advance further, driven by investor sentiment regarding the Bank of Japan‘s (BoJ) monetary policy challenges amidst a lack of significant wage growth.
Persistent weakness in the Japanese Yen is underscored by recent remarks from Senior Japan Ruling Party Executive Ochi, indicating concerns over excessive depreciation against the US Dollar. Ochi’s statement, expressing unease if the yen were to slide towards 160 or 170 to the dollar, suggests potential policy actions in response to further depreciation.
Previously, speculation centered on intervention at the 155.00 level for USD/JPY. However, with revised upward targets for the major currency pair, the Japanese Yen faces heightened downside risks.
Investor attention remains keenly focused on the upcoming BoJ interest rate decision, scheduled for Friday. A recent Reuters poll highlighted economists’ consensus, indicating no expected rate hike before June. While there is anticipation of a future rate increase, the timing lacks clear consensus among economists.
In contrast, the Euro exhibits relative weakness against other currencies amidst expectations of an interest rate cut by the European Central Bank (ECB) in its June meeting. ECB policymaker Villeroy de Galhau’s recent remarks hinted at potential rate cuts, contingent upon economic developments. The emphasis on structural transformation amid receding inflation signals a proactive stance.
Echoing this sentiment, ECB’s Joachim Nagel suggested that a June rate cut may not necessarily initiate a series of reductions, indicating cautious but decisive policy action in response to economic conditions.
