EUR/JPY moves sideways near 156.70, BoJ keeps the policy rate unchanged
|- EUR/JPY gained ground ahead of the economic data from the Eurozone.
- BoJ maintained its interest rate at -0.1% as widely expected.
- Geopolitical tension, as Houthi attacks on ships, could support the safe-haven JPY.
- Traders await Eurozone Harmonized Index of Consumer Prices data to gain fresh impetus on economic conditions.
EUR/JPY extends its gains for the second consecutive day, trading higher around 156.70 during the Asian session on Tuesday. The Bank of Japan (BoJ) announced its Interest Rate Decision on Tuesday, keeping the cash rate at -0.1% as anticipated. Investors await BoJ Governor Kazuo Ueda's press conference for insights into economic conditions, which might influence the potential exit from the ultra-dovish monetary policy in January.
BoJ Monetary Policy Statement shows that BoJ has decided to maintain the 1.0% reference rate for the 10-year Japanese Government Bond (JGB) yield. The central bank notes a moderate recovery in the economy, with private consumption steadily increasing. Inflation expectations have also risen moderately. The projection for Japan's economy is optimistic, foreseeing continued growth above the potential growth rate. Additionally, the rate of increase in the Consumer Price Index (CPI) is expected to remain above 2% through fiscal 2024.
The situation in the Middle East has led to increased geopolitical tensions, prompting some investors to seek safety in the Japanese Yen (JPY). Houthi militants conducted attacks on commercial vessels in the Red Sea. On the other side, Israeli strikes in Gaza have resulted in additional Palestinian casualties, and Hamas has stated that talks will not take place until Israeli bombardment ceases.
The IFO Institute's recent report disclosed that the German Business Climate for December dipped to 86.4 compared to the previous 87.2, falling below the expected 87.8. The Current Assessment also saw a decline from 89.4 to 88.5, while the Expectations Index eased from 85.1 to 84.3 in the same period.
The deteriorating economic conditions in Germany may hinder the Euro's (EUR) gains against the Japanese Yen. Investors look forward to Tuesday's release of November's Eurozone Harmonized Index of Consumer Prices (HICP) for further market insights.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.