EUR/JPY Surges as ECB Signals End of Rate Cuts; BoJ Policy Decision in Focus
The EUR/JPY currency pair climbed back to near 166.60 on Thursday after recovering early losses, as the Euro gained strength following signals from the European Central Bank (ECB) that its ongoing policy-easing cycle may soon end.
Euro Gains Strength Across the Board
The Euro outperformed major global currencies during the European session. It posted strong gains, especially against the US Dollar (USD) and Japanese Yen (JPY). The Euro’s rise came after ECB board member Isabel Schnabel stated that the current monetary easing cycle is nearly complete, with inflation stabilizing near the 2% target.
Schnabel said, “This monetary-policy cycle is coming to an end,” noting that inflation is expected to average 1.9% in 2026 and 2027. She added that the Eurozone growth outlook remains stable despite external risks like the global trade war tensions.
ECB Rate Cuts Near Completion
Last week, ECB policymaker Madis Muller echoed similar views, indicating the ECB’s rate-cutting cycle is in its final stage. His remarks followed ECB President Christine Lagarde’s statement that the central bank is “almost done easing.” The ECB has now cut rates seven times, bringing the key interest rate to 2%.
Euro Boosted by Safe-Haven Demand
Apart from ECB policy signals, the Euro’s rally was also driven by its growing reputation as a safe-haven asset. With rising uncertainty around US tariff policies, investors are turning to the Euro as a liquid alternative to the US Dollar.
Yen Holds Ground Amid BoJ Speculation
While the Euro rose against the Yen, the Japanese currency remained strong compared to other global peers. Investors expect the Bank of Japan (BoJ) may hike interest rates again this year if core inflation trends closer to their 2% target.
BoJ Governor Kazuo Ueda recently signaled that the central bank remains open to more policy tightening. The upcoming BoJ monetary policy meeting, scheduled for Tuesday, will be closely watched. Markets widely expect rates to stay at 0.5%, but future hikes remain on the table.
Conclusion
The EUR/JPY pair’s rebound reflects both the Euro’s policy shift and its renewed safe-haven appeal, while the Japanese Yen stays resilient ahead of a key BoJ decision. With investors watching both central banks closely, the pair could see further volatility in the coming weeks.
📈 Key Highlights:
- EUR/JPY nears 166.60, a 7-month high
- ECB hints at end of policy easing
- Euro gains on safe-haven demand
- BoJ may tighten rates if inflation holds
