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EUR/JPY rises after ECB lifts deposit rate to 2.50%
The ECB’s move comes as investors weigh when the Bank of Japan will next hike, with the cross climbing about 0.4% to above 179.
EUR/JPY strengthened on Thursday after the European Central Bank raised its deposit rate by a quarter point to 2.5%, described as its second hike since the outbreak of the US-Iran war. The move helped steady the pair, which had fallen from above 180.00 over the prior week.
At the time of writing, EUR/JPY was up 0.4%, reversing a three-day winning streak for the yen. ECB President Christine Lagarde characterized the decision as straightforward, citing rising inflation forecasts and the eurozone’s resilience, while avoiding any commitment to the next move.
Lagarde also warned that gas prices could increase due to supply disruptions or a cold winter. Euro area inflation was 3.3% in August, driven by energy, supporting the case for further tightening bets.
Attention is shifting to the Bank of Japan ahead of its September 18 meeting, where traders are looking for whether it will raise rates soon after, with one adviser indicating a hike is likely in September and another by early next year. FXStreet also noted that technical levels are holding EUR/JPY above short-term support around 179.05, while resistance is near 179.46.