Insights 
VT 
EUR/JPY rose to a multi-year high above 179.00, reaching 179.29 on Wednesday, supported by the ongoing weakness of the Japanese Yen. This rise came as German inflation figures confirmed a slowdown in price growth, prompting expectations for prolonged stable interest rates from the European Central Bank.
Inflation and Interest Rates
Germany’s Harmonized Index of Consumer Prices increased by 0.3% MoM and 2.3% YoY, aligning with ECB’s price stability target. ECB’s Isabel Schnabel stated that interest rates are well-positioned, though inflation risks remain slightly upward. In Japan, Prime Minister Sanae Takaichi’s call for continued loose monetary policies contributed to the weakening Yen.
A fiscal stimulus package is anticipated in Japan on November 21, suggesting a potential delay in the Bank of Japan’s rate hike beyond December. Traders watch for possible Japanese intervention in the forex market if the Yen depreciates further. The interest rate differential between the Eurozone and Japan currently supports EUR/JPY.
The Euro was strongest against the Japanese Yen, with EUR up 0.56% against JPY. The heat map displays percentage changes of major currencies against each other, with the Euro notably outperforming the Yen.
Given the current situation on November 12, 2025, the interest rate difference between the European Central Bank (ECB) and the Bank of Japan (BoJ) remains the main driver. The latest flash estimate for Eurozone inflation in October came in at 2.5%, slightly above the ECB’s target, which supports their decision to keep interest rates high for now. This makes holding long EUR/JPY positions through derivatives like futures or options an attractive strategy to collect the positive carry.
Risk of Currency Intervention
On the other side, the Japanese Yen’s weakness seems set to continue, especially with officials favoring loose monetary policy to boost growth. We saw the BoJ end its negative interest rate policy back in early 2024, but that did little to stop the Yen’s long-term decline. With Japan’s latest national core inflation data for October at a modest 2.1%, there is little pressure on the BoJ to consider another rate hike before the new year.
We must remain alert to the risk of currency intervention by Japanese authorities, as they have done in the past to stop sharp declines in the Yen. We recall the major interventions of late 2022 and the constant verbal warnings throughout 2024 whenever the USD/JPY pair neared the 150-152 level. To manage this risk, derivative traders should consider using protective put options on the EUR/JPY pair to hedge against a sudden reversal.
For the coming weeks, the trend appears to favor a higher EUR/JPY, especially ahead of Japan’s fiscal stimulus announcement on November 21. A larger-than-expected stimulus could further weaken the Yen and push the currency pair higher. Strategies such as bull call spreads could allow traders to profit from this expected upward move while limiting potential downside risk if intervention does occur.
