English
EUR/JPY becomes exceedingly volatile amidst BOJ intervention rumors and ECB/BOJ policy discussion
EUR/JPY has fluctuated wildly between 143.75 and 147.27 amid rumors of a possible BOJ intervention. It is anticipated that the BOJ would maintain its ultra-dovish monetary policy to support economic fundamentals. To fight intensifying pricing pressures, the ECB may increase interest rates by 75 basis points.
The EUR/JPY pair fluctuated between 143.75 and 147.27 throughout the Tokyo session. The cross is exhibiting extreme volatility in light of the Bank of Japan's (BOJ) intervention in the foreign exchange (FX) markets to defend the Japanese yen from speculative moves. Following remarks by Japan's senior currency ambassador, Masato Kanato, the asset is exhibiting erratic behavior.
Japan's Kanda stated on Monday that the administration is prepared to take measures 24 hours a day, seven days a week to defend the yen against speculative currency market movements. Japanese officials refused to comment on their interference in foreign exchange markets, but they pledged to take measures against disruptive market movements.
Notably, the asset demonstrated a knee-jerk reaction on Friday after surpassing the crucial threshold of 148.00.
This week will be dominated by the BOJ's monetary policy announcement. As a result of foreign demand shocks, Japan's economic outlook is weakening, which may prompt the continuation of an ultra-dovish monetary policy. Last week, Japan's inflation data came in below expectations. The headline Consumer Price Index (CPI) fell to 3.0% from 3.1%, and the core CPI landed at 1.8% from 2.0% as expected.
On the Eurozone front, the shared currency bulls will react to Thursday's expected interest rate decision from the European Central Bank (ECB). According to Rabobank experts, a 75 basis point (bps) increase in interest rates is certain. They predict that the deposit rate will hit 3% by March of next year.
As inflationary pressures in the trading bloc are not yet anchored, ECB President Christine Lagarde has no choice but to tighten monetary policy further.
Reuters reported on Friday that the German parliament is set to vote on a €200 billion emergency rescue package to combat the energy crisis.
Bonus rebate to help investors grow in the trading world!
