EUR/JPY holds position near 167.50 after BoJ interest rate decision

EUR/JPY continues its winning streak that began on June 5, trading around 167.40 during the Asian hours on Tuesday. The pair has marked 167.59, the highest since July 2024. The currency pair holds ground after the Bank of Japan (BoJ) decided to keep the short-term interest rate target unchanged in the range of 0.4%- 0.5% in June.

The BoJ has extended the pause in its rate-hiking cycle into the third consecutive month in June, maintaining the policy rate at the highest level in 17 years. Markets expect the BoJ to postpone the rate hike to the first quarter of 2025 due to uncertainty over US tariff policy.

The Japanese Yen (JPY) faced challenges after Japanese Prime Minister Shigeru Ishiba and US President Donald Trump met on the sidelines of the G7 Summit in Canada on Monday, but failed to conclude a trade deal.

Japan had expected to close a deal to avoid US tariffs of 25% on cars and 24% on other imports, which are paused until July 9. Japanese PM Ishiba said, “We’ve been exploring the possibility of a deal down to the wire, but there are still points where our views remain divided.” He highlighted the importance of protecting Japan’s auto sector, calling it a "major national interest."

The EUR/JPY cross received support from improved risk sentiment amid decreasing concerns of escalating tensions between Israel and Iran. Iran reportedly asked many countries, including Oman, Qatar, and Saudi Arabia, to urge US President Donald Trump to use his influence on Israel for an immediate ceasefire, per Reuters.