BoJ maintains status quo with short-term rates unchanged at 0.4%-0.5% range,bitcoin news extending policy pause through June
Failed US-Japan trade negotiations at G7 summit create headwinds for JPY
Improved risk sentiment supports EUR as Middle East tensions show signs of easing
The EUR/JPY currency cross continues demonstrating resilience in Tuesday's Asian session, hovering near 167.40 after touching 167.59 earlier - the highest level observed since July 2024. This sustained upward trajectory, now in its second week, comes despite mixed fundamental drivers affecting both currencies.
Market participants digested the Bank of Japan's anticipated decision to maintain its current monetary policy framework. The central bank kept its short-term interest rate target within the 0.4%-0.5% band, marking the third consecutive month of policy stability. With this move, Japanese policymakers preserve borrowing costs at their highest level since 2007 while signaling caution about future adjustments.
Analysts note the BoJ's cautious stance reflects multiple considerations, including ongoing uncertainty surrounding US trade policy. Market expectations now point toward potential rate adjustments being deferred until early 2025, as Japanese officials await clarity on potential tariff implementations that could significantly impact export-reliant sectors.
The Japanese yen faced additional pressure following inconclusive trade discussions between Japanese Prime Minister Shigeru Ishiba and US President Donald Trump during the G7 summit in Canada. Negotiations aimed at preventing the reinstatement of substantial US tariffs on Japanese automotive and industrial exports failed to produce agreement, with the current tariff moratorium set to expire on July 9.
Prime Minister Ishiba emphasized the critical importance of safeguarding Japan's automotive industry, describing it as vital to national economic interests. The lack of resolution introduces new uncertainty for Japanese exporters and manufacturers, creating potential volatility for JPY crosses in coming weeks.
Meanwhile, the euro found support from improving global risk sentiment as geopolitical tensions in the Middle East showed tentative signs of easing. Reports indicate Iranian officials have engaged regional mediators including Oman and Qatar to facilitate ceasefire discussions, potentially reducing the likelihood of further regional escalation that could disrupt energy markets and trade flows.
Technical analysts observe the EUR/JPY pair maintains constructive price action above key moving averages, with the next significant resistance level emerging near the 168.00 psychological handle. Market participants will monitor upcoming Eurozone economic data and developments in US-Japan trade relations for fresh directional catalysts.
