Key Moments
- EUR/JPY retreated below 186.00 after touching a new record high at 186.82.
- The Bank of Japan kept its benchmark interest rate unchanged at 0.75%, in line with expectations.
- The Yen strengthened after BoJ Governor Ueda’s press conference, reversing earlier broad weakness.
EUR/JPY Reverses From Fresh All-Time Highs
EUR/JPY slipped back below the 186.00 level after earlier climbing to a new record high at 186.82. The cross had initially extended its advance beyond 186.00 following the Bank of Japan’s Monetary Policy decision, but later gave up gains as volatility surged across Yen pairs during BoJ Governor Ueda’s press conference.
At the time of writing, the Euro was trading around 185.60 against the Japanese Yen, having retreated from levels near 187.00. All major Yen crosses were experiencing sharp swings as market participants reacted to Ueda’s remarks.
BoJ Policy Stance and Ueda’s Comments
The Bank of Japan left its key interest rate unchanged at 0.75%, a decision that had been broadly anticipated. This follows a 25 basis point hike in December, which took rates to their highest level in 30 years.
The Japanese Yen initially weakened against its major counterparts after Kazuho Ueda emphasized that the central bank’s policy board needs additional time to assess the effects of prior rate increases before considering further tightening.
Ueda also stated that conditions remain accommodative, despite December’s hike, and that underlying inflation is coming closer to the 2%, which suggests that the bank remains committed to gradually raising interest rates.
Following the conclusion of Ueda’s press event, however, the Yen rebounded, prompting a pullback in EUR/JPY and other Yen crosses.
Political Backdrop and Yen Performance
The Yen has been under sustained pressure since Japanese Prime Minister Sanae Takaichi called snap elections earlier this week. Market participants are concerned that Takaichi’s increasing popularity could secure stronger parliamentary backing for continued fiscal expansion, which investors fear might elevate the risk of a debt crisis.
BoJ Interest Rate Decision – Key Data
The latest Bank of Japan interest rate announcement is summarized below:
| Economic Indicator | Detail |
|---|---|
| Event | BoJ Interest Rate Decision |
| Last release | Fri Jan 23, 2026 03:07 |
| Frequency | Irregular |
| Actual | 0.75% |
| Consensus | 0.75% |
| Previous | 0.75% |
| Source | Bank of Japan |
How BoJ Decisions Typically Impact the Yen
The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.
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