- EUR/JPY's progress while Japanese Yen weakened as the BOJ left the main interest rate unchanged at 0.5% on Thursday.
- The BOJ also lowered the median core CPI forecast for fiscal 2026 to 1.7%, down from 2.0% in January.
- The markets are more priced at a 25 basic point rate cut by the European Central Bank (ECB) at the June meeting.
EUR/JPY stopped at a three -day losing stripes, bouncing around 162.50 at the time of Asian trading on Thursday. Recovery on the Cross of Money came as Japanese Yen (JPY) weakened the entire board, following the Bank of Japan (BOJ )'s widely expected decision to maintain its policy rate.
As expected, the BOJ left the major interest rate unchanged at 0.5% on Thursday amid little uncertainty in US tariffs. In its policy statement, the Central Bank reiterated its commitment to gradually increase interest rates if economic development and inflation are in accordance with hopes.
Noteworthy, the BOJ changed the median core CPI forecast for fiscal 2026 to 1.7%, down from 2.0% in January. However, it has been maintained that inflation is likely to hover around its 2% target during the last half of the projection period until 2027.
The attention now turns into the post-meeting press conference, where comments from BoJ Governor Kazuo Ueda will be monitored for views on the future path of rate increases, which can significantly influence JPY's movement in the near term.
Adding to JPY's weaknesses, earlier comments from US President Donald Trump has aroused a modified optimization of a potential avoidance of US-China trade tensions. This, in turn, weighs in demand for traditional safe properties such as Yen.
Meanwhile, the Euro (EUR) is trading with care after the release of a soft initial April agreed with consumer prices (HICP) data index from Germany and France, in conjunction with a steady reading from Italy and Spain. Inflation data suggests moderate price pressure on the entire Eurozone economy, which reinforces the expectations of additional policy of emerging from the European Central Bank (ECB).
The markets were almost priced at a 25 basic point rate cut at the June Policy Meeting of the ECB, with officials projecting further denial of inflation and economic activity in response to recent tariffs imposed by the US to trading partners.
