Snapshot: EUR/JPY is consolidating overnight ranges as the market digests the Bank of Japan’s policy hold at 0.50% and pivots to ECB Chief Economist Philip Lane’s upcoming address at 13:10 London. While the BoJ’s sluggish normalisation keeps the yen fundamentally weak, the Euro’s yield advantage is gradually eroding after the ECB’s April cut to 2.50% and core HICP cooling to 2.3%.
- The 200bp nominal policy rate differential remains the primary anchor for carry, but any dovish rhetoric from Lane regarding softening wage trackers or services inflation will likely trigger a direct test of the 168.50 support level.
- Japanese Ministry of Finance intervention risk remains highly asymmetric, capping EUR/JPY topside near 170.50 even if US 10Y yields backing up to 4.48% provides temporary support to the broader G10 carry trade.
Bias into NY: Tactical bias is to sell EUR/JPY rallies up to 170.20, targeting a break below 168.00, as the ECB’s persistent easing bias diverges from the BoJ’s slow-burn normalisation path.