Yen under pressure on intervention worries

EURJPY is retracing its recent gains from the previous session, trading around 163.20 in European markets on Tuesday. The Euro-Yen cross remains subdued following the release of the Bank of Japan’s Meeting Minutes for October’s monetary policy.

BoJ board members highlighted the possibility of gradual rate hikes if inflation trends align with expectations, potentially reaching 1.0% by late fiscal 2025.

The Minutes also underscored a cautious approach to monetary policy, focusing on wage-driven economic growth while addressing domestic and global uncertainties, along with fiscal measures to counter deflationary pressures.

Japan’s Finance Minister Katsunobu Kato stated on Friday that the government “will take appropriate action against excessive moves” in the foreign exchange market and will continue coordinating with international authorities on forex policies.

Last week, BoJ Governor Kazuo Ueda reiterated that the central bank would wait for further data to assess whether wage growth could maintain its upward momentum next year, aiming for greater clarity on economic trends.

The downside risks for EURJPY is strengthened due to the subdued Euro amid rising bets of further rate reduction by the European Central Bank.

The Financial Times published an interview of ECB President Christine Lagarde on Monday, stating that the European Central Bank is nearing its goal of sustainably bringing inflation down to the medium-term target of 2%.

However, Lagarde stressed the importance of continued vigilance, particularly concerning inflation in the services sector.

On Saturday, ECB Governing Council member Boris Vujcic highlighted that the central bank plans to continue lowering borrowing costs in 2025, according to Bloomberg.

“The direction is clear—it’s a continuation of the path from 2024, with further reductions in interest rates,” he said.

(Source: OANDA)