EUR/JPY Selloff Continues as BoJ Hints at Hawkish Shift

The EUR/JPY currency pair is trading in negative territory, hovering around 179.85 during early European trading hours on Thursday.

Japanese authorities' intervention risks are providing some support to the Japanese Yen against the Euro, following Germany's IFO survey due later today.

Analysts note that FX intervention remains a blunt tool for propelling up currencies, and without a forceful monetary policy response, it will be challenging for Japanese officials to halt the selloff in the yen, according to Matthew Ryan, head of market strategy at Ebury Partners Ltd.

The Bank of Japan (BoJ) raised its policy rates by 25 basis points last week as widely expected, but Governor Kazuo Ueda's remarks fell short of increasingly hawkish market expectations.

US-Japan alignment extends into BoJ policy and yen carry dynamics, with analysts at Rabobank highlighting that the deepening strategic ties between the two countries are reflected in financial markets.