**The Yen’s Policy Challenges** In contrast, the Euro is benefiting from the belief that the European Central Bank (ECB) has finished adjusting interest rates. In the Eurozone, employment rose by 0.1% in the third quarter, and GDP grew by 0.2% from the previous quarter, matching expectations. Annual growth reached 1.4%, slightly above forecasts, showing the Eurozone’s economic strength. With the EUR/JPY nearing 180.00, a level not seen since 2008, the difference in policies between Europe and Japan is a major factor. The Euro’s stability is backed by recent Eurostat data, which shows Eurozone inflation at 2.5% in October 2025. This suggests that the ECB is unlikely to lower its main interest rate of 3.50% anytime soon, making Euros more attractive than Yen. The Japanese Yen is facing pressure due to the Bank of Japan’s (BoJ) hesitance to tighten its policy significantly, even as national inflation in Japan is around 2.8%. The large interest rate gap, with the BoJ’s policy rate at just 0.10%, is driving a strong carry trade. This trend could help push EUR/JPY past the 180.00 resistance level soon. **Exploring Strategic Options** For those expecting this trend to continue, purchasing call options with strike prices of 181.00 or 182.00 for late December or January can be a smart move. This strategy allows traders to profit if the pair continues to rise due to the policy gap. However, there is a risk that the option may expire worthless if the momentum changes or slows down. It’s important to note the increasing warnings from Japanese officials regarding the weak yen. In 2022 and 2024, the Ministry of Finance directly intervened in the market to support the currency, and similar actions could occur if the yen rises sharply above 180.00. While the chances of an unexpected rate hike from the BoJ at its December meeting are currently low, this possibility shouldn’t be overlooked. To handle this uncertainty, traders might explore strategies that benefit from sudden increases in volatility. A long straddle—buying both a call and a put option with the same strike price and expiry date—could profit from a significant price movement in either direction. This prepares for a breakout to new highs or a sudden reversal due to central bank actions. Ultimately, the upcoming central bank meetings in December will be crucial. We will be closely monitoring any changes in communication from the ECB or the BoJ. Any indication that the BoJ is preparing to more aggressively normalize its policy could lead to a significant correction from these multi-year highs. Create your live VT Markets account and start trading now.

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