EUR/JPY Falls Below 165.00 as JPY Strengthens on BoJ Rate Hike Bets

EUR/JPY Falls Below 165.00 as JPY Strengthens on BoJ Rate Hike Bets

The EUR/JPY currency pair slipped to around 164.85 during the early Monday session, breaking its two-day winning streak. The Japanese Yen (JPY) strengthened as markets became increasingly convinced the Bank of Japan (BoJ) will continue its gradual rate-hiking path, supported by upward revisions to Japan’s GDP data.

Japan GDP Surprise Reaffirms BoJ Policy Path

On Monday, Japan’s Cabinet Office reported that Q1 GDP contracted just 0.2% year-on-year, a significant upward revision from the initial -0.7% figure. Quarterly growth was flat (0.0%), outperforming the prior estimate of -0.2%. This stronger economic performance has bolstered expectations for further BoJ tightening, which is lifting demand for the safe-haven JPY.

The BoJ is scheduled to hold its next two-day monetary policy meeting next week, and speculation around a potential 25 basis point rate hike is growing.

ECB Lagarde: “We Are in a Good Position”

Meanwhile, European Central Bank (ECB) President Christine Lagarde stated that the Eurozone is in a good position after the recent rate cut to 2%, suggesting a cautious approach moving forward. This dovish tone has weighed on the Euro (EUR), limiting the EUR/JPY pair’s upside.

Investors are also awaiting the release of Eurozone Sentix Investor Confidence data later Monday, which could further shape sentiment around the single currency.

EUR/JPY Technical Outlook

• Current Level: ~164.85
• Resistance Levels: 165.50, 166.25
• Support Levels: 164.30, 163.80
• Momentum: Mildly Bearish

The pair broke below its recent short-term support at 165.00, and could test 164.30 in the near term. However, broader bullish trends may return if sentiment stabilizes.

Related Tredu Articles:

• BoJ Rate Hike Watch: What Japan’s Revised GDP Means for JPY
• ECB Cuts Rates: How Markets Reacted Across Forex and Bonds
• Safe Haven Demand Rises Amid Trade Uncertainty

Conclusion:

As Japan’s economy shows resilience and speculation builds around the BoJ’s next move, the JPY remains supported across major crosses. Combined with dovish ECB signals, the EUR/JPY pair could remain pressured in the near term unless risk sentiment shifts decisively.