The EUR/JPY pair fell below 155.50 on Wednesday as cautious remarks from Bank of Japan (BoJ) Deputy Governor Shinichi Uchida fueled speculation over the central bank’s next policy move. Traders reacted to Uchida’s comments, which hinted at potential shifts in Japan’s monetary policy, increasing uncertainty and boosting demand for the yen.
The BoJ has been under pressure to gradually tighten its ultra-loose policy, as inflation in Japan remains above target. Uchida’s remarks, which emphasized the need for careful adjustments to monetary policy, have raised expectations that the central bank could start normalizing rates sooner than anticipated. This has led to fresh buying interest in the yen, pushing EUR/JPY lower.
Meanwhile, the euro struggled for direction, with investors closely watching economic data from the Eurozone. While recent reports have signaled some resilience in the bloc’s economy, persistent concerns over slowing growth and sticky inflation have kept the European Central Bank (ECB) cautious about its rate trajectory. A more dovish stance from the ECB could weigh further on the euro against the strengthening yen.
Global risk sentiment has also played a role in the yen’s gains. With investors wary of geopolitical uncertainties and shifting central bank policies, risk-off flows have supported safe-haven currencies, adding to the downside pressure on EUR/JPY. If market jitters persist, the yen could extend its advance, keeping the pair under pressure.
From a technical perspective, EUR/JPY is testing key support levels, and a sustained move below 155.50 could open the door for further declines. Traders are watching whether yen strength continues or if the euro finds support amid upcoming economic releases.
For now, EUR/JPY remains under pressure, with Uchida’s comments reinforcing the narrative that the BoJ may be edging closer to a policy shift. As markets digest these developments, the pair’s next move will likely depend on further signals from both the BoJ and ECB, as well as broader risk sentiment.
