Crypto & Forex October 29, 2025 0 Comments

EUR/JPY Dips Below 177.00—Is the BoJ’s Next Move About to Shake the Markets to Their Core?

Ever wonder what’s behind the latest tumble in EUR/JPY? As this currency pair slips for a second day straight, hovering near 176.90 during Asia’s morning hustle, it’s clear the Japanese Yen is flexing its muscles right before a big moment: the Bank of Japan’s policy announcement tomorrow. Investors are biting their nails, trying to guess if the BoJ will stick to status quo interest rates or hint at those elusive rate hikes everyone’s whispering about, now that tariff worries are easing but inflation still looms like a stubborn cloud. And let’s not forget the US Treasury Secretary’s recent nudge for Japan to give its central bank more freedom to raise rates — because apparently, the Yen’s been playing the wallflower at this borrowing cost party for way too long.

Mix in some high-stakes diplomacy — hello, Trump and new PM Takaichi signing off on trade deals — and you’ve got quite the financial soap opera unfolding. Even Japan’s top government spokespeople are chiming in, promising tight coordination with the BoJ to hit that sweet 2% inflation mark. Meanwhile, on the Eurozone side, inflation expectations seem to be doing a delicate dance of their own, holding steady or slipping just a bit, hinting at a labor market trying to catch its breath.

It’s one of those moments where every economic whisper could tip the scales — and if you’re asking yourself what this all means for your portfolio or the global economy, you’re not alone. Ready to unravel the full story? LEARN MORE

EUR/JPY continues to lose ground for the second consecutive day, trading around 176.90 during the Asian hours on Wednesday. The currency cross weakens as the Japanese Yen (JPY) gains ground, with investors positioning ahead of the Bank of Japan’s (BoJ) policy decision on Thursday.

The BoJ is expected to keep interest rates unchanged, but policymakers are likely to discuss the conditions for resuming rate hikes as tariff-related risks subside, even as persistent inflation continues to cloud the economic outlook.

The JPY also draws support after US Treasury Secretary Scott Bessent urged Japan’s government on Wednesday to allow the central bank greater flexibility to raise interest rates, intensifying his warning to Tokyo against maintaining a weak Yen through prolonged low borrowing costs. Meanwhile, US President Donald Trump met with newly appointed Prime Minister Sanae Takaichi on Tuesday, pledging to strengthen US-Japan relations and signing agreements on trade and critical minerals.

Japanese Chief Cabinet Secretary Minoru Kihara said in a statement on Wednesday that he “expects the Bank of Japan (BoJ) to conduct monetary policy to appropriately achieve the inflation target.” Government will continue to closely coordinate with the BoJ, Kihara added.

Eurozone median consumer inflation expectations declined to 2.7% in September 2025 from 2.8% in August. Expectations for inflation three years ahead held steady at 2.5%, while five-year expectations remained unchanged at 2.2%, matching the highs last seen in 2022.

Meanwhile, expectations for the unemployment rate 12 months ahead were unchanged at 10.7%. Consumers continued to see the future unemployment rate as only slightly above the current perceived rate of 10.2%, indicating a broadly stable labor market outlook.

Bank of Japan FAQs

The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.