Insights 
VT 
The EUR/JPY reached an all-time high as the Japanese Yen weakened after the Bank of Japan’s interest rate decision. The BoJ held its policy rate steady at 0.50%, with a 7-2 vote, as policymakers opted for a supportive stance. The Euro remained robust ahead of the European Central Bank’s rate decision.
European Central Bank Decision
EUR/JPY traded around 178.30, rising nearly 0.60%, as traders awaited the ECB’s announcement. The BoJ’s rate decision aligned with market expectations; dissenters favored a 0.75% rate, indicating a cautious approach. Governor Ueda stated future rate hikes would depend on economic forecasts, citing high overseas uncertainties.
The ECB’s decision later in the day was anticipated to keep rates steady: 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 0.2% QoQ and 1.3% YoY, slightly surpassing forecasts, supporting the ECB’s current policy stance.
The Yen weakened notably across currencies, showing its strongest performance against the Australian Dollar. The Japanese Yen showed declines against other major currencies in percentage changes. The base currency is selected from the left column of the table, with quote currency along the top row.
The significant policy divergence between the European Central Bank and the Bank of Japan continues to be the primary driver of this market. We see the ECB holding its deposit rate firm at 2.00% while the BoJ signals an ongoing accommodative stance, creating a clear path for further EUR/JPY strength. This makes maintaining long positions through derivatives a compelling strategy for the weeks ahead.
Options Strategy
We believe buying EUR/JPY call options offers a prudent way to gain exposure to further upside. This approach allows us to participate in the trend while strictly defining our maximum risk to the premium paid. Given the pair is trading at all-time highs, managing risk is more critical than ever.
This view is supported by the latest economic data from earlier in October 2025. Eurozone core inflation has remained persistent, hovering at 2.9%, which gives the ECB no reason to signal a dovish pivot. In contrast, while Japan’s headline inflation is also above target at 2.8%, the lack of sustained wage growth justifies the BoJ’s decision to wait.
We must, however, be cautious of potential intervention from Japanese authorities to slow the yen’s decline. We saw Japan’s Ministry of Finance act to strengthen the yen back in late 2022 when the currency weakened dramatically against the dollar. Any sharp, disorderly moves in EUR/JPY toward the 180 level could attract similar official attention.
The push into uncharted territory has increased market volatility, which can make options more expensive. We should consider using bull call spreads, which involve buying a call option while simultaneously selling another at a higher strike price. This strategy helps to lower the initial cost of the trade, even though it caps the potential profit.
