EUR/JPY traded in a tight range near 184.00 during European trading on Thursday. The pair stayed steady as markets awaited clearer signals on future policy moves by the European Central Bank (ECB) and the Bank of Japan (BoJ).
Recent comments from most ECB officials indicated that the April meeting remains open. They referred to higher oil prices linked to the Middle East war and said inflation risks have moved higher.
Central Bank Signals And Market Uncertainty
Last week, ECB policymaker and Bundesbank president Joachim Nagel said a rate rise in April is an option. He said “every passing day contributes to an increase in inflationary risks”.
On Thursday, ECB Governing Council member Gediminas Simkus said the ECB needs to be cautious because conditions are changing. He added it is too early to predict what the ECB will do in April.
The BoJ kept the option of further tightening if the economy performs as expected, as stated in last month’s policy statement. On Wednesday, newly appointed BoJ member Toichiro Asada said higher oil prices have increased inflation risks.
A correction at 11:30 GMT said the BoJ kept the option open for more tightening at the March meeting, not “keep”.
How The Outlook Shifted From 2025 To 2026
Looking back to early April 2025, we saw the EUR/JPY pair stuck around the 184.00 level as traders weighed hawkish signals from both the European Central Bank and the Bank of Japan. This created significant uncertainty, leading to the tight trading range observed at the time. The main question was which central bank would act more decisively on its inflation concerns.
The ECB’s concern over inflation, which we now know pushed the Harmonised Index of Consumer Prices to a peak of 3.1% in the second quarter of 2025, made buying call options on the euro an appealing strategy then. Officials like Joachim Nagel were correctly signaling a more aggressive stance, which ultimately led to a rate hike that year. This validated bets on a stronger euro against other currencies.
Meanwhile, the Bank of Japan’s hints at tightening were met with skepticism, given its long history of maintaining an ultra-loose policy. While their language shifted, their actions remained cautious throughout 2025, causing the yen to weaken further as interest rate differentials with Europe widened. This divergence was the key driver for the pair’s subsequent breakout to the upside.
Today, on April 2, 2026, the situation has evolved significantly. The ECB is now hinting at potential rate cuts later this year as Eurozone GDP growth slowed to just 0.2% in the last quarter, a stark contrast to their hawkish tone from a year ago. The BoJ, on the other hand, is now facing sustained wage growth, with recent data showing a 3.8% annual increase, putting genuine pressure on them to normalize policy.
Given this reversal in central bank outlooks, traders should now consider strategies that favour a stronger yen relative to the euro. With EUR/JPY currently trading near 196.20, buying put options or establishing other bearish positions could be a prudent approach for the coming weeks. The potential for the BoJ to finally enact a meaningful rate hike while the ECB pivots towards easing presents a clear trading signal.
