EUR/JPY Sees Uptick Below 162.50, Attention Shifts to BoJ Rate Announcement

In the Asian session on Monday, the EUR/JPY pair maintains a positive stance, hovering around 162.35. Traders are closely monitoring the upcoming Bank of Japan (BoJ) monetary policy meeting scheduled for Tuesday, anticipating a potential shift in the central bank’s ultra-dovish stance in March or April. The EUR/JPY pair is trading slightly lower at 162.35, marking a marginal decrease of 0.01% for the day.

Several European Central Bank (ECB) policymakers are signaling the possibility of the first rate cut in the June meeting. Considering the downward revisions in inflation forecasts, ECB President Christine Lagarde hinted that June could be the earliest timeframe for a rate cut. Moreover, ECB Governing Council members, including Klaas Knot and Yannis Stournaras, have expressed similar sentiments, projecting multiple rate cuts throughout the year.

Meanwhile, analysts hold varied opinions regarding the timing of the BoJ’s potential rate hike, debating between March and April. If a rate hike occurs, the central bank might raise interest rates by 20 basis points to 0.1% from the current -0.1%. Market sentiment leans towards a potential rate hike in April, with a 39% probability priced in for Tuesday’s announcement. Any dovish remarks from Japanese policymakers could weigh on the Japanese Yen (JPY) and bolster the EUR/JPY cross.

On Monday, market participants will closely monitor vital economic indicators such as the Eurozone Harmonized Index of Consumer Prices (HICP) and Trade Balance. The focus will shift to the BoJ interest rate decision on Tuesday, alongside the release of the ZEW Survey from Germany and the Eurozone. Traders will analyze these data points for potential trading opportunities surrounding the EUR/JPY pair.

EUR/JPY