EUR/JPY remains stable around 183.00 as the Yen strengthens due to BoJ policy changes.

    by VT Markets
    /
    Jan 8, 2026
    The EUR/JPY currency pair is currently close to 183.00. This is largely due to the strength of the Japanese Yen, which is influenced by the Bank of Japan’s (BoJ) ongoing policy changes. In Asia, the currency is trading around 183.00. BoJ Governor Kazuo Ueda has indicated that interest rates may rise if the economy performs as expected. In November 2025, Japan’s Labour Cash Earnings increased by 0.5% year-on-year. This was below expectations and represents the smallest growth in four years. Real wages fell by 2.8% since inflation exceeded earnings growth, which poses challenges for the BoJ. Tensions with China, especially after China imposed export restrictions on Japan, may also affect the Yen.

    Economic Indicators and Their Impacts

    Upcoming economic data includes Germany’s Factory Orders, the Eurozone’s Business Climate, and the Unemployment Rate. Eurostat recently released the preliminary Eurozone Harmonized Index of Consumer Prices for December, showing a 2% annual increase, down from 2.1% in November. The Core HICP rose by 2.3% year-on-year. The Bank of Japan has typically pursued loose monetary policy to boost economic growth. This approach included Quantitative and Qualitative Easing and implementing negative interest rates. Starting in March 2024, the BoJ began to increase interest rates in response to rising inflation, which has been driven by a weaker Yen and increasing global energy prices. As we enter January 2026, the EUR/JPY remains around 183.00, reflecting considerable market uncertainty. The BoJ’s commitment to raising rates is being challenged by disappointing economic data from late 2025. This creates a complex environment for making clear predictions in the coming weeks. Looking back at last year, Japan’s wage growth slowed dramatically in November 2025, dropping to just 0.5%, signaling potential issues. This concern was echoed in the latest Tokyo Core CPI data for December, which also fell short of expectations at 2.1%, compared to a predicted 2.3%. These trends suggest that the BoJ might need to postpone its next rate hike, limiting Yen strength for now.

    Factors Influencing EUR and JPY

    On the other hand, the Euro is facing challenges from declining inflation, as seen in the preliminary December 2025 HICP figure of 2.0%. This data suggests that the European Central Bank may be ending its tightening cycle and could consider rate cuts later this year. The gap that weakened the Yen in 2022-2023 is now narrowing; this may prevent the currency pair from rising significantly. We must also consider the geopolitical risks linked to ongoing trade and security tensions between Japan and China. These tensions can unexpectedly weaken the Yen and disrupt the monetary policy outlook. This uncertainty makes short-term trading positions susceptible to sudden changes. Given these mixed signals, traders may want to adopt strategies that take advantage of uncertainty instead of making straightforward directional bets. For instance, using options to manage risk, such as buying a straddle before Japan’s next national CPI report, could capture a significant price move in either direction. Alternatively, if traders expect the 181.50-184.50 range to hold, selling out-of-the-money strangles might be a viable strategy. Create your live VT Markets account and start trading now.

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