EUR/JPY steady below 180.00 as BoJ dovishness, Eurozone resilience persist

EUR/JPY trades around 179.90 on Tuesday at the time of writing, virtually unchanged on the day, as the cross continues to consolidate just beneath the psychological 180.00 level. The modest pullback from recent highs remains contained, with the broader bias still tilted to the upside thanks to persistent weakness in the Japanese Yen (JPY).

The JPY remains on the defensive following comments from Japanese Prime Minister Sanae Takaichi, who urged the Bank of Japan (BoJ) to maintain low interest rates to support economic growth and stabilize inflation. This political stance reinforces expectations that the BoJ may delay any further tightening, especially after Japan’s Q3 GDP contraction and amid growing political resistance.

As reported by Nikkei Asia, Tokyo is also considering tax reforms including reductions aimed at boosting consumption, a move that raises additional questions about fiscal sustainability and weighs on the attractiveness of the Japanese Yen in uncertain times.

Still, JPY weakness is partially tempered by recent remarks from Japanese officials. Finance Minister Satsuki Katayama reiterated concerns over “one-sided, rapid” moves in the foreign exchange market, fuelling speculation about potential intervention and preventing excessive bearish positioning on the Japanese currency.

On the European side, the Euro (EUR) maintains structural support thanks to the European Central Bank (ECB)’s cautious stance. Policymakers have emphasized the need for patience, arguing that the current economic backdrop warrants a prolonged pause in monetary adjustments. Comments from Olli Rehn and Olaf Sleijpen calling for vigilance toward inflation and financial risks reinforce this view.

Eurozone fundamentals also provide a modest tailwind. According to a recent report by BNP Paribas analysts, third-quarter growth surprised to the upside, led by France and Spain, while confidence indicators suggest ongoing improvement in economic momentum. “In Europe, and in the Eurozone in particular, the most likely scenario seems to us to be one of accelerating growth”, noted the analysts.