- EUR/JPY stays under heavy bearish pressure and trades below 163.00 on Wednesday.
- The Bank of Japan unexpectedly raised its policy rate by 15 basis points.
- Core HICP inflation in the Eurozone held steady at 2.9% on a yearly basis in July.
EUR/JPY faced significant bearish pressure on Wednesday, falling to its lowest level since mid-April at 162.20. Currently, the pair is trading at 162.90, marking a 1.4% decline for the day.
BoJ raises policy rate by 15 bps
The Bank of Japan’s unexpected decision to raise its policy rate by 15 basis points to 0.15%-0.25% has led to a surge in Japanese Yen strength, causing EUR/JPY to trend lower. Additionally, the BoJ announced a tapering of Japanese government bond purchases to JPY3 trillion per month starting in Q1 2026, further boosting the JPY.
Governor Kazuo Ueda indicated in a post-meeting press conference that the BoJ plans to continue raising rates and adjust easing measures based on economic and price outlook, providing support for the JPY. As a result, USD/JPY has dropped by 1% below 150.50.
On the other hand, Eurostat reported that core HICP inflation in the Eurozone remained at 2.9% year-on-year in July, matching June’s figure and surpassing market expectations of 2.8%.
The Japanese Yen is a key currency influenced by various factors like the BoJ’s policies, bond yield differentials, and risk sentiment. The recent developments in the forex market, especially the BoJ’s rate hike, have significant implications for currency traders and investors.