Markets price 80% odds of a Bank of Japan rate hike by September, weighing on the EUR/JPY cross near 184.60.
The EUR/JPY pair fell to 184.60 in early European trading Wednesday, pressured by rising expectations of a Bank of Japan rate hike. Overnight index swaps reflect an 80% probability of tightening by September, bolstering the Japanese Yen.
Recent inflation data and political pressure have amplified speculation, with strategists noting Prime Minister Sanae Takaichi’s support for higher rates to stabilize the currency. However, fiscal concerns over proposed tax cuts could limit JPY gains.
The cross remains below its 100-day simple moving average, reinforcing a mild bearish bias as traders await Friday’s CPI report.