EUR/JPY Steadies as Traders Await ECB and BoJ Decisions

Key Moments

EUR/JPY trades near 183.50 on Wednesday, showing little change as traders wait for Thursday’s ECB and BoJ decisions.
Eurozone HICP rose 0.6% MoM in February and 1.9% YoY, with core inflation at 0.8% MoM and 2.4% YoY.
ECB and BoJ are both expected to keep rates on hold, while markets still price in potential tightening later in the year.

Euro-Yen Pair Steadies Ahead of Major Central Bank Meetings

EUR/JPY is trading around 183.50 on Wednesday at the time of writing, with the cross essentially flat on the day. Market participants are keeping risk appetite muted ahead of Thursday’s monetary policy announcements from the European Central Bank (ECB) and the Bank of Japan (BoJ).

Eurozone Inflation Shows Gradual Improvement

Recent Eurozone inflation data indicate a moderate but improving pattern. The Harmonized Index of Consumer Prices (HICP) climbed 0.6% month-on-month in February, reversing a 0.6% drop recorded in January, although the latest figure came in slightly below early estimates.

On a year-on-year basis, headline inflation is at 1.9%, compared with January’s 16-month low of 1.7%. Core inflation also strengthened, rising 0.8% on the month and reaching 2.4% annually, underscoring more persistent underlying price dynamics.

ECB Policy Outlook and Market Pricing

Against this backdrop, the ECB is widely expected to leave its deposit rate unchanged at 2%, with inflation seen as broadly consistent with its objective. However, expectations about the forward path of policy differ across markets and economists.

Interest rate futures currently reflect expectations for a rate increase by July, along with a notable probability of another adjustment before the end of the year. In contrast, most economists anticipate that the ECB will maintain current settings for an extended period. Any shift toward a more hawkish tone during the post-decision press conference could lend support to the Euro (EUR) against the Japanese Yen (JPY) in the near term.

BoJ Balances Inflation Risks and Growth Concerns

In Japan, uncertainty remains elevated. The BoJ is anticipated to keep its benchmark rate steady at 0.75%, as policymakers maintain a guarded approach in the face of inflation pressures linked to higher energy costs associated with Middle East tensions. Japan’s significant dependence on imported energy complicates the task of sustaining growth while restraining inflation.

Despite the likely policy pause, the BoJ maintains a hawkish tilt. BoJ Governor Kazuo Ueda is expected to reaffirm that the normalization process is still in place, while highlighting the importance of monitoring geopolitical developments and their implications for the domestic economy. Market pricing continues to reflect the possibility of a rate hike as early as April, although the timing will be heavily influenced by moves in energy prices and trends in wage growth.

EUR/JPY Stuck in Consolidation as Policy Stances Converge

The interaction between a cautious ECB and a BoJ that is gradually leaning more hawkish is constraining clear directional moves in EUR/JPY. This combination is keeping the cross locked in a short-term consolidation phase as traders await more definitive signals from both central banks.

Euro Performance Across Major Currencies

The table below shows today’s percentage changes of the Euro (EUR) versus major currencies, alongside cross-moves among the other pairs. According to the data, the Euro has been strongest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD	—	0.39%	0.34%	0.34%	0.19%	0.77%	0.73%	0.56%
EUR	-0.39%	—	-0.04%	-0.04%	-0.20%	0.36%	0.32%	0.16%
GBP	-0.34%	0.04%	—	0.00%	-0.16%	0.42%	0.36%	0.20%
JPY	-0.34%	0.04%	0.00%	—	-0.15%	0.44%	0.35%	0.18%
CAD	-0.19%	0.20%	0.16%	0.15%	—	0.57%	0.51%	0.36%
AUD	-0.77%	-0.36%	-0.42%	-0.44%	-0.57%	—	-0.05%	-0.22%
NZD	-0.73%	-0.32%	-0.36%	-0.35%	-0.51%	0.05%	—	-0.17%
CHF	-0.56%	-0.16%	-0.20%	-0.18%	-0.36%	0.22%	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 from the left column and moving horizontally to the US Dollar cell shows the percentage move for EUR (base)/USD (quote).