EUR/JPY Slips Below 167.20 After BoJ Governor Ueda Unveils JGB Strategy

EUR/JPY Edges Lower Near 167.00 After BoJ's Ueda Details Bond Buying Plans

The EUR/JPY currency pair lost its recent upside momentum during early Tuesday trading in Europe, falling to 167.20 after touching a multi-month high of 167.59 during the Asian session. The pullback follows cautious commentary by Bank of Japan Governor Kazuo Ueda, who laid out the central bank’s bond purchase strategy through March 2027, prioritizing market stability and flexibility.

BoJ Maintains Policy, Extends JGB Purchase Plans

During the BoJ policy meeting, the short-term interest rate target was left unchanged at 0.4%–0.5%, in line with market expectations. Governor Ueda announced that the BoJ will continue purchasing Japanese Government Bonds (JGBs) with greater flexibility to manage yield volatility. His remarks emphasized the importance of maintaining accommodative monetary conditions, especially in light of evolving inflation expectations.

He warned against premature tapering of bond purchases, citing potential market disruptions, and said that any tapering would be based on extensive consultation with market participants. Ueda also signaled that in the event of rising long-term rates, the BoJ is ready to respond swiftly with fixed-rate bond purchases and liquidity operations.

ECB September Rate Cut Odds Decline

Meanwhile, on the European front, the probability of a rate cut by the European Central Bank (ECB) in September has slipped to 50% from 60%, diminishing Euro strength. With the ECB signaling a possible end to its easing cycle, investors are recalibrating expectations on policy divergence between the BoJ and ECB.

Technical Outlook

The EUR/JPY pair has broken its winning streak that began on June 5, and technical momentum shows signs of cooling. Key support lies near 166.50, while resistance is at 167.60, which coincides with the pair’s recent peak.

Conclusion

With the BoJ's cautious stance and the ECB's rate outlook in flux, EUR/JPY is expected to remain volatile. Traders are watching for further guidance on tapering and inflation from both central banks, especially amid broader global uncertainty.