EUR/JPY rallies above 158.00 as BoJ stays with dovish stance
- EUR/JPY aims a stabilization above 158.00 on BoJ’s dovish policy stance.
- BoJ kept doors open for more easing measures if required.
- ECB Villeroy expects rate cuts some time in 2024.
The EUR/JPY pair run swiftly above the crucial resistance of 158.00 in the European session. The strength in the cross is backed by absence of cues regarding an exit from the ultra-loose monetary policy stance in the last interest rate meeting of 2023 by the Bank of Japan (BoJ).
The BoJ was widely anticipated to keep interest rates unchanged in the negative territory at 0.1% but the market was expecting that policymakers would unveil the roadmap stating how they would get exit from its decade-long ultra-loose policy stance.
BoJ said in a statement that it won’t hesitate in taking easing measures if necessary. Investors took the statement as absence of confidence among BoJ policymakers for shifting to normal policy stance. The BoJ is expected to not consider exiting expansionary policy until wages turn sufficient enough to keep inflation steady around 2%.
BoJ Governor Kazuo Ueda said in his monetary policy statement that the economy is gradually picking up and the likelihood for the price index gradually increasing toward target through FY2025 is improving.
Meanwhile, the strength in the Euro remains unabated despite escalating hopes of an endgame to interest rates by the European Central Bank (ECB). ECB Villeroy signalled that the rate-tightening regime has concluded now and rate cuts are expected at some time in 2024.
On the economic data front, final Eurozone headline and inflation remained at 3.6% and 2.4% respectively. In spite of significant progress in inflation towards 2%, ECB President Christine Lagarde maintained a hawkish tone last week.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
