EUR/JPY Edges Higher as BoJ Rate Hike Expectations Rise

The EUR/JPY currency pair is moving higher on Monday, despite growing expectations of further monetary tightening by the Bank of Japan (BoJ). Markets are fully pricing in a 25-basis-point rate hike this week and another increase potentially coming in December. The European Central Bank's (ECB) policy outlook remains uncertain, with ECB President Christine Lagarde saying discussions at their last meeting focused on the decision taken and not the future path of monetary policy.

BoJ Governor Kazuo Ueda will hold a press conference after the rate decision, where investors will closely monitor for indications about the pace of future rate hikes. A more hawkish message could support the Japanese Yen (JPY) and limit the upside in EUR/JPY. On the other hand, Peter Kazimir, a member of the ECB Governing Council, expressed concerns over energy prices.

The potential divergence between a BoJ continuing its tightening cycle and an ECB avoiding clear guidance on its next steps could become an important driver for EUR/JPY. The signals provided by Kazuo Ueda will be crucial in determining whether the pair can preserve its recent gains.