EUR/JPY Under Pressure on BoJ Minutes & ECB Stance

Key Moments

EUR/JPY Slips as BoJ Minutes Support Hawkish Bias

The EUR/JPY cross is trading softer near 177.90 in early European hours on Thursday, extending its move in negative territory. The Japanese Yen (JPY) is gaining ground against the Euro (EUR) after the release of the Bank of Japan’s (BoJ) September meeting minutes, which reinforced expectations that further interest rate increases are likely.

The minutes published on Thursday showed that most BoJ policymakers viewed additional rate hikes as appropriate, with underlying inflation moving closer to the central bank’s 2% objective. One board member suggested there could be scope to speed up the pace of tightening while the BoJ evaluates the impact of developments in the Middle East, rising demand linked to Artificial Intelligence (AI), and Foreign Exchange (FX) market moves.

ECB Hawkish Tone Offers Some Support to the Euro

On the European side, a firmer policy stance from the European Central Bank (ECB) is helping to limit the downside for the EUR. ECB Governing Council member Joachim Nagel stated on Tuesday that the central bank will probably raise borrowing costs next month amid a deteriorating inflation outlook. According to the article, economists anticipate one final rate move next month, while market pricing points to further tightening continuing into 2027.

Eurozone Facing Rising Inflation and Slowing Growth

Analysts at Standard Chartered pointed to recent Eurostat data showing that euro area headline inflation was “rising to 4.0% y/y in October, above our expectation of 3.8%,” which “signals upside risks to the European Central Bank’s (ECB’s) September projection of 3.6% average inflation in Q4.” On the activity front, they highlighted that “stripping Ireland out, euro area GDP growth was a more modest 0.2%, and, crucially, growth momentum has been falling steadily since Q4-2025.”

Standard Chartered argued that this “combination of weakening growth momentum (using euro area ex Ireland data) and still-rising inflation creates a growing policy dilemma for the ECB,” with “inflation dynamics (and the risk of second-round effects)” likely to dominate for now and “underpinning our expectation of another 25bps hike at the December meeting.” While they emphasized that “stagflation is not our base case; we expect growth to remain positive and inflation to begin falling early next year,” the bank warned that “the direction of travel is that way, and the forces that could produce stagflation in coming quarters are apparent: higher energy prices that are squeezing real income and weighing on corporate profit margins; ECB monetary tightening operating with lagged effects on household and corporate borrowing costs; and tighter financial conditions weighing on broader activity.”

Nagel Highlights Likelihood of Further ECB Hike

Nagel’s latest comments carried a more hawkish tone than usual, with an FXS Speechtracker score of 8.2 compared with a historical average of 7.0, as a December rate increase was described as “very likely to be necessary.” The focus on inflation pressures being stronger than anticipated and close to an adverse scenario underscores a clear tightening bias and supports the Euro through rate expectations.

Nagel also stressed that an energy price surge must not translate into widespread inflation, signaling a willingness to act again if needed. At the same time, he indicated that fiscal challenges in France are outside the ECB’s monetary policy remit. The mix of strong inflation warnings and confidence that fiscal issues will be handled keeps attention firmly on price stability and underpins a hawkish interpretation for Euro market participants.

Technical Picture: EUR/JPY Maintains Bearish Tone Below 100-day SMA

From a technical standpoint, EUR/JPY remains in a corrective phase on the daily chart, with price action capped beneath the 100-day Simple Moving Average (SMA). This positioning maintains a broader bearish bias even after a recent bounce from the lower Bollinger Band. Spot has moved back above the 20-day Bollinger SMA, hinting at some short-term stabilization, while the Relative Strength Index (RSI) stands at 53.4, indicating a neutral-to-positive configuration and suggesting that downside momentum has eased but not fully reversed the prevailing cap from higher moving averages.