EUR\/JPY rose for a second session, trading near 182.80 in Asian hours on Thursday. Gains may be limited as the yen draws support from expectations of further Bank of Japan tightening.<\/p>\n
Reuters said markets price nearly an 80% chance of a BoJ rate rise in April 2026. Policymakers are expected to review new data before any further tightening steps.<\/p>\n
Japan\u2019s core machinery orders rose 19.1% month on month to \u00a51,052.5 billion in December 2025. This followed an 11% fall in November and beat forecasts for a 4.5% rise.<\/p>\n
The rise was linked to large one-off orders from refineries and nuclear fuel producers. Private-sector orders increased 16.8% year on year in December, after a 6.4% drop in November, beating forecasts for a 3.9% rise.<\/p>\n
The Financial Times reported that ECB President Christine Lagarde may leave before October 2027. It said no timeline was given.<\/p>\n
Attention turns to Japan\u2019s national CPI on Friday, plus early PMI data for Germany and the Eurozone. The BoJ targets about 2% inflation, used QQE from 2013, added negative rates and yield control in 2016, and raised rates in March 2024.<\/p>\n
We see the EUR\/JPY pair is pushing higher now, but we should be cautious as this rally looks fragile. The market is overwhelmingly expecting the Bank of Japan to raise interest rates in April, with an almost 80% probability priced in. This expectation should act as a strong ceiling for the pair in the coming weeks.<\/p>\n
The case for a stronger Yen is building, especially after we saw Japan\u2019s national core CPI for January 2026 hold firm at 2.4%, staying above the central bank’s target. While the huge jump in December 2025 machinery orders was noted as a one-off event, it adds to a picture of an economy that can withstand tighter policy. We must now watch the upcoming national CPI data on Friday for confirmation of this trend.<\/p>\n
On the other side of the trade, the Euro is facing its own headwinds from political uncertainty surrounding the ECB presidency. This kind of leadership question can easily weaken a currency, regardless of economic data. The most recent Eurozone Composite PMI for January 2026 was 48.5, which still signals economic contraction and makes the Euro’s strength look unconvincing.<\/p>\n
For derivative traders, this setup screams of rising volatility ahead of the April BoJ meeting. In fact, one-month implied volatility for EUR\/JPY has already climbed to a six-month high of 9.5%, showing the market is bracing for a significant price swing. This suggests that buying puts to protect against a downside correction or using straddles to trade the expected increase in volatility could be prudent strategies.<\/p>\n
We have seen this kind of situation before, when looking back at events in 2025. When market expectations for a BoJ policy shift reached a fever pitch, the Yen strengthened rapidly, leading to sharp drops in pairs like EUR\/JPY. The current upward trend feels similar to the run-up before those previous corrections.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/JPY extends gains near 182.80; BoJ tightening expectations support yen, while ECB leadership uncertainty weighs sentiment.<\/p>\n","protected":false},"author":62,"featured_media":17052,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42258","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42258","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=42258"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42258\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17052"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42258"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42258"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42258"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}