The EUR/JPY hit a record high as the Japanese Yen weakened following the Bank of Japan’s (BoJ) interest rate announcement. The BoJ decided to keep its policy rate unchanged at 0.50%, with a 7-2 vote in favor. This shows their supportive approach. Meanwhile, the Euro stayed strong ahead of the European Central Bank’s (ECB) rate decision.

European Central Bank Decision

The EUR/JPY was trading around 178.30, up nearly 0.60%, as traders awaited the ECB’s announcement. The BoJ’s decision matched market expectations. However, some policymakers wanted a rate of 0.75%, showing a cautious mindset. Governor Ueda mentioned that future rate hikes will rely on economic forecasts, especially due to uncertainties overseas. Later in the day, the ECB was expected to keep rates the same: the Deposit Facility Rate at 2.00%, the Main Refinancing Operations Rate at 2.15%, and the Marginal Lending Facility Rate at 2.40%. Eurozone GDP grew by 0.2% quarter-over-quarter and 1.3% year-over-year, which was slightly better than expected, supporting the ECB’s current policy. The Yen weakened against many currencies and showed a notable drop against the Australian Dollar. The table indicates the base currency on the left and the quote currency along the top. The main factor driving the market is the differing policies of the ECB and the BoJ. The ECB is maintaining its deposit rate at 2.00%, while the BoJ is taking an accommodative approach, paving the way for further strength in EUR/JPY. This trend makes holding long positions through derivatives an attractive strategy in the coming weeks.

Options Strategy

Buying EUR/JPY call options is a wise way to gain exposure to potential gains. This strategy allows us to benefit from the upward trend while keeping our maximum risk limited to the premium paid. Since the pair is at an all-time high, managing risk is crucial. Recent economic data from early October 2025 shows that Eurozone core inflation remains steady at 2.9%, leaving the ECB with no reason to adopt a gentler stance. Conversely, Japan’s headline inflation is above target at 2.8%, but the lack of steady wage growth supports the BoJ’s decision to hold off on changes. We must remain alert to possible interventions from Japanese authorities aimed at stabilizing the Yen. This was seen in late 2022, when Japan’s Ministry of Finance acted to support the currency after it weakened significantly against the dollar. Any sharp moves in EUR/JPY toward the 180 mark might draw similar official intervention. The shift into unfamiliar territory has increased market volatility, which can raise options costs. We might consider using bull call spreads—buying a call option while selling another at a higher strike price. This approach lowers the initial trade cost, although it limits potential profits. Create your live VT Markets account and start trading now.

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