The EUR/JPY currency pair edged higher to approximately 163.00 during the early European trading hours on Monday, as uncertainty over the Bank of Japan‘s (BoJ) monetary policy outlook weighed on the Japanese Yen (JPY). Meanwhile, market participants are closely watching speeches from European Central Bank (ECB) officials Luis de Guindos and Philip Lane, scheduled for later in the day.
BoJ Governor Kazuo Ueda addressed monetary policy earlier on Monday, stating that decisions on adjusting the central bank‘s monetary support would hinge on Japan’s economic, price, and financial conditions. He also noted that the BoJ may not wait for external risks to fully dissipate before implementing rate hikes. However, Ueda stopped short of offering clear guidance on whether a rate increase could come as soon as December. This lack of clarity has added downward pressure on the JPY, providing support for the EUR/JPY pair.
Counteracting this movement, verbal interventions from Japanese officials may help stabilize the Yen. Finance Minister Katsunobu Kato reiterated on Friday that the government would closely monitor forex markets and take appropriate action against excessive fluctuations.
On the European side, ECB board member Piero Cipollone remarked last week that the central bank should consider further interest rate cuts to bolster the Eurozone’s fledgling economic recovery and to address potential challenges such as new U.S. trade tariffs. However, Cipollone emphasized that the trajectory of rate adjustments would be data-dependent. This dovish sentiment may weigh on the Euro in the near term, potentially limiting further gains for the EUR/JPY cross.
Investors are now awaiting fresh insights from ECB officials, as well as further signals from the BoJ, to gauge the direction of monetary policies and their impact on the currency pair.
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