EUR/JPY Outlook: Slightly positive, but likely to move sideways as it is above its recent average and near the mid-range of the past three months.
Key drivers:
• The European Central Bank (ECB) is maintaining a neutral monetary policy stance while Japan's central bank, the Bank of Japan (BoJ), has recently signaled potential further rate hikes to control inflation.
• Oil prices remain elevated, which can influence the euro due to its connection with economic activity in the Eurozone, while also affecting the yen given Japan's reliance on energy imports.
• Japan's proactive stance on potential market intervention could create volatility for the yen, impacting its value against the euro.
Range: The EUR/JPY exchange rate is likely to drift within the recent range, influenced by ongoing developments in both Europe and Japan.
What could change it:
• A more aggressive tightening strategy from the ECB could provide upward pressure on the euro.
• Heightened concerns over further yen depreciation or intervention measures could lead to downward pressure on the JPY, impacting the cross rate.
