EUR/JPY Holds Steady as BoJ Hike Bets Surge and ECB Tightening Looms

The EUR/JPY currency pair has stabilized near the 185.70 level on Monday, showing little change.

This stability is attributed to Japan's National CPI rising 1.9% year-on-year in July from 1.6% in June, with core inflation excluding fresh food accelerating to 1.8% from 1.6%. These numbers have increased the likelihood of a Bank of Japan rate rise in September, with markets pricing an 82% chance.

The interest rate gap between Japan and other major economies remains wide, constraining the yen's advance. Meanwhile, expectations for tighter European Central Bank policy are supporting the euro, with a 95% probability of a September hike implied by the ECB Watch tool.