Euro-Yen Cross Holds Firm as Central Bank Divergence Shapes FX Landscape

Key Moments

EUR/JPY is trading near 184.70 on Monday, showing minimal movement amid mixed policy signals from the Eurozone and Japan.
The ECB has left its key rate at 2.0% since June and signaled a prolonged pause, with inflation projections below 2% for the next two years and a return to target in 2028.
The Japanese Yen remains underpinned by safe-haven demand and expectations of gradual BoJ tightening after its recent rate hike to 0.75%.

ECB Policy Steadiness Anchors the Euro

EUR/JPY is trading around 184.70 on Monday at the time of writing, with the cross largely unchanged on the day. The pair is navigating a backdrop marked by contrasting dynamics between the Eurozone and Japan, as market participants weigh the resilience of the European policy framework against factors that continue to lend support to the Japanese Yen (JPY).

In the Eurozone, the European Central Bank (ECB) has kept its key policy rate at 2.0% since June. At its meeting last week, the central bank confirmed a continuation of its policy pause and raised its projections for both growth and inflation. ECB President Christine Lagarde stated that monetary policy is in a “good place” and indicated that interest rates are likely to stay unchanged for an extended period. The latest forecasts show inflation remaining below 2% over the next two years and then reaching the target in 2028, reinforcing expectations that the current stance will be maintained for a considerable time.

ECB Officials Emphasize Balanced but Modest Outlook

Several ECB policymakers have echoed this narrative. Peter Kažimír, Governor of the National Bank of Slovakia, commented earlier in the day that risks surrounding the economic outlook have become more balanced, while still expressing caution over relatively weak long-term growth prospects. In parallel, Gediminas Simkus, a member of the Governing Council and Governor of the Bank of Lithuania, observed that Eurozone growth has improved but remains lackluster, with inflation seen hovering near the 2% objective over the medium term.

Yen Draws Strength from Risk Aversion and Policy Expectations

On the Japanese side, the Yen continues to gain from several supportive elements. Its status as a safe-haven asset is being reinforced by ongoing geopolitical strains and worries about global fiscal conditions. Remarks by Atsushi Mimura, Japan’s Vice Finance Minister for International Affairs, have revived market speculation about the possibility of official action aimed at countering what are regarded as excessive foreign exchange moves, helping to curb downside risks for the JPY.

From a policy perspective, the Bank of Japan (BoJ) recently increased its policy rate to 0.75%, a level described as the highest in several decades, while signaling that further tightening remains possible if economic activity and inflation follow the anticipated path. BoJ Governor Kazuo Ueda has intentionally avoided providing precise guidance on when and how fast future rate hikes might occur, underscoring that decisions will be guided by developments in economic, price, and financial conditions. An analysis from ING suggests that additional rate hikes are anticipated, but not in the near term, with a possible horizon extending into 2026.

EUR/JPY Caught Between Steady ECB and Gradual BoJ Normalization

Within this environment, EUR/JPY is struggling to establish a clear directional trend. The ECB’s signal of extended stability limits fresh upside catalysts for the Euro (EUR), while the Yen continues to find backing from expectations of progressive policy normalization in Japan and an unsettled global backdrop.

Euro Performance Against Major Currencies

The table below presents the percentage change of the Euro (EUR) versus major currencies today. According to the data, the Euro has been strongest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD	—	-0.22%	-0.47%	-0.19%	-0.21%	-0.44%	-0.44%	-0.27%
EUR	0.22%	—	-0.25%	0.04%	0.02%	-0.22%	-0.22%	-0.05%
GBP	0.47%	0.25%	—	0.27%	0.26%	0.04%	0.03%	0.20%
JPY	0.19%	-0.04%	-0.27%	—	-0.02%	-0.24%	-0.25%	-0.08%
CAD	0.21%	-0.02%	-0.26%	0.02%	—	-0.22%	-0.23%	-0.05%
AUD	0.44%	0.22%	-0.04%	0.24%	0.22%	—	-0.01%	0.15%
NZD	0.44%	0.22%	-0.03%	0.25%	0.23%	0.00%	—	0.17%
CHF	0.27%	0.05%	-0.20%	0.08%	0.05%	-0.15%	-0.17%	—

The heat map reflects percentage changes between major currencies. The base currency is taken from the left-hand column, and the quote currency from the top row. For instance, selecting the Euro as the base currency on the left and moving horizontally to the US Dollar column shows the percentage change for EUR (base)/USD (quote).