Euro edges higher against the Japanese Yen following BoJ monetary policy decision

EUR/JPY ticks up to the 176.40 area, approaching weekly highs at 176.60.
The Bank of Japan left interest rates on hold and cast doubt on a December rate hike.
In Europe, German import prices and France's CPI beat expectations in September.

Guillermo Alcala FXStreet

The Euro (EUR) extends gains for the third consecutive day against the Japanese Yen (JPY) on Friday, as investors ponder the cautious tone of the Bank of Japan’s (BoJ) monetary policy statement. The EUR/JPY trades at 176.40 at the time of writing, with the weekly high of 176.60 on sight, although it remains practically flat on the weekly chart.

The BoJ met expectations and left its benchmark interest rate on hold at 1.25% after its monetary policy meeting on Friday. The bank’s statement affirmed that underlying inflation has reached the 2% target and projected a median core CPI of 2.5% in 2026 and 2.7% in 2027.

The statement also reinforced the bank’s commitment to keep inflation anchored but showed a cautious tone on further interest rate hikes, conditioning them on developments in FX markets, AI and the Middle East. This stance was echoed at Governor Kazuho Ueda’s press conference, and triggered a slight JPY pullback against its main peers.

Inflation grows beyond expectations in Germany and France

In the Eurozone, the German Import Price Index beat expectations in September with a 2.1% advance and a 10.4% year-on-year gain from 1% and 8.3% respective increases in August.

France’s Consumer Price Index (CPI), released shortly afterwards, has shown a similar outcome, with monthly inflation growing 0.4% after a 0.3% contraction in August and the yearly rate accelerating to 3.8% from 3.4%, above the 3.6% market consensus.

On Thursday, the European Central Bank left interest rates on hold, as expected, and President Christine Lagarde announced an early exit in February 2027. The bank stated that energy prices keep boosting inflation and hampering economic growth but also observed that financial conditions "have tightened since the Governing Council's last meeting, which is likely to weigh on inflation and growth." The Euro edged up against its main peers following the event.

Economic Indicator

Import Price Index (MoM)

Import price index, reported by Federal Statistical Office (Destatis), measures the change in prices for goods imported by Germany . The Import Price Index is important in distinguishing changes in trade volume versus changes in trade prices. Whereas growth in import volume suggests stronger consumer demand and economic expansion, growth in import prices suggests higher production costs and inflationary pressures.

Economic Indicator

Consumer Price Index (EU norm) (MoM)

The Consumer Price Index released by INSEE is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of the Euro is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the Euro, while a low reading is seen as negative (or bearish).

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