The EUR/JPY pair stabilized around 177.70 during the Asian session on Monday, recovering modestly after recording losses in the previous session.
The Japanese yen (JPY) weakened slightly as the Bank of Japan (BoJ) maintained a cautious stance on monetary policy, while thin trading volumes owing to Japan’s public holiday kept overall market activity muted.
BoJ maintains cautious tone, keeps rates unchanged
The BoJ left its policy rate unchanged last week, with Governor Kazuo Ueda reiterating that global trade uncertainties could dampen growth and corporate profitability. Ueda hinted at the possibility of a rate adjustment in December but emphasized the need for additional data before altering the current degree of monetary accommodation.
Market participants remain divided over the timing of the BoJ’s next move, particularly as Japan’s new Prime Minister, Sanae Takaichi, is expected to prioritize fiscal expansion and resist aggressive tightening measures.
Recent remarks from former official Sayuri Katayama also highlighted shifting perspectives on the yen’s valuation, as she noted that her previous estimate of fair value at 120–130 per dollar may no longer hold.
ECB officials emphasize flexibility amid balanced risks
On the European front, policymakers from the European Central Bank (ECB) have signaled a steady approach to policy adjustments following the October meeting.
ECB member Francois Villeroy de Galhau said the central bank is in a “good position” but stressed the importance of maintaining full optionality to respond to potential market or economic risks. He underlined the need for “agile pragmatism” guided by evolving data and forecasts.
Similarly, ECB policymaker and Latvian central bank governor Martins Kazaks noted that inflation and growth risks in the Eurozone are becoming more balanced. He added that the ECB will act when necessary but should avoid overreacting to short-term developments.
Technical outlook
From a technical perspective, EUR/JPY remains supported above the 177.50 level, with near-term momentum favoring a mild recovery as long as the pair holds above this zone. Immediate resistance is seen near 178.20, followed by 178.65.
A sustained move above these levels could open the path toward the 179.30 region. On the downside, initial support lies at 177.20, followed by 176.75 and the psychological 176.00 handle.
