The EUR/JPY has steadily risen and is now at the highest level since August 1992. Currently, it trades just under 179.00, with a daily gain of about 0.25%. A key reason for this rise is the uncertainty surrounding the Bank of Japan’s (BoJ) monetary policy. The BoJ’s approach differs from the pro-stimulus policies that Japan’s Prime Minister supports.

Japan Stimulus Package

Japan’s government plans to finalize a stimulus package by November 21, aimed at boosting the economy and maintaining stable prices. In the meantime, the euro is supported by expectations that the European Central Bank (ECB) has stopped cutting interest rates. Technically, the EUR/JPY has broken through the 178.25-178.30 resistance level, setting the stage to possibly reach 180.00. Additionally, the Japanese Yen is underperforming, especially against the British Pound. A currency heat map shows percentage changes among major currencies, highlighting the weakness of the Japanese Yen. The analysis and visuals provide a clear snapshot of the current market, with detailed data to help understand FX trends. Since the EUR/JPY has reached its highest level in over thirty years, it indicates a strong potential for further gains in the upcoming weeks. The situation is clear: the European Central Bank has indicated an end to rate cuts, while the Bank of Japan remains reluctant to tighten its policy. This difference in policies is driving the pair toward the 180.00 level.

Eurozone Inflation and Currency Strategy

On the Euro side, the outlook looks promising. Recent data shows Eurozone core inflation held steady at 2.1% for October 2025, slightly above the ECB’s target. This stability supports the view that further rate cuts are unlikely, providing a strong basis for the Euro against a weaker Yen. In contrast, the Japanese Yen faces pressure due to domestic economic challenges. Japan’s Q3 2025 GDP figures showed a slight annual contraction of -0.1%, prompting the government’s push for a new stimulus package expected around November 21. This focus on fiscal stimulus rather than monetary tightening suggests the BoJ cannot raise borrowing costs, contributing to the Yen’s weakness. For derivative traders, this situation makes long positions through call options or futures on EUR/JPY particularly appealing. Purchasing call options with a strike price of 180.00 or higher for December or January expiration allows for potential gains while limiting risk. The recent breakout above 178.30 has paved the way for this critical psychological milestone. We are seeing a return to classic carry trade dynamics, similar to those in the mid-2000s, where traders borrow in a low-interest-rate currency like the Yen to invest in higher-yielding currencies. Recent data shows large speculators have increased their net short positions on the Yen to the highest levels since early 2024. Market sentiment strongly favors further Yen weakness. Although the trend appears robust, traders should be alert for verbal intervention from Japanese officials, which may increase as the pair nears major levels like 180.00. However, looking back at interventions in 2023 and 2024, their effects were often fleeting if not backed by fundamental policy changes from the BoJ. The primary risk remains a sudden shift in global risk sentiment, but the current momentum seems solid. Create your live VT Markets account and start trading now.

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