The EUR/JPY cross gains momentum around 160.00 during the early European session on Friday. The Bank of Japan (BoJ) decided to keep its policy rate unchanged, as widely expected. However, the uncertain outlook of the BoJ monetary policy is likely to cap the upside of the Japanese Yen (JPY) for the time being.
The BoJ kept its benchmark interest rate steady at around 0.25%, the highest level since 2008, at the conclusion of a two-day meeting on Friday. “The central bank is expected to hike rates in October, and “further dial back monetary support this year despite a poor run of economic data,” noted Stefan Angrick, associate director at Moody’s Analytics.
BoJ Governor Kazuo Ueda said during the press conference that the Japanese central bank “will keep adjusting the degree of easing if our economic and price outlooks are to be realized.” Ueda added that uncertainties surrounding Japan’s economy and prices remain high, and he will monitor the economy and market trends with an extremely high sense of urgency.
However, he affirmed there is no change to his thinking that the BoJ will keep raising rates if the economy moves in line with the outlook. The rising expectation that the BoJ will raise the interest rate later this year could lift the JPY against the Euro (EUR).
On the other hand, the European Central Bank (ECB) reduced its interest rates last week during its September meeting. Investors will take more cues from ECB President Christine Lagarde’s speech later on Friday. Any dovish remarks from Lagarde could weigh on the shared currency in the near term, while the hawkish tone might lift the EUR. More By This Author:WTI Softens Below $71.00, Ongoing Geopolitical Tensions Might Cap Its Downside USD/CAD Trades With Mild Gains Above 1.3600, Fed Cuts Rates For First Time In Four Years USD/CAD Holds Positive Ground Near 1.3600 On Firmer US Dollar
