EUR/JPY Softens to Near 184.50 Amid Hawkish Signals from BoJ

The EUR/JPY cross softened to near 184.50 during European trading hours on Wednesday, maintaining a mildly bearish bias under the 100-day SMA. The Japanese Yen edged higher against the Euro amid hawkish signals from the Bank of Japan, with growing speculation that interest rates may rise in the coming months. Reuters reported that the BoJ is considering a rate hike as soon as September, with overnight index swaps pricing in an 80% chance by that month.

However, mounting fiscal worries in Japan could exert selling pressure on the JPY. Prime Minister Sanae Takaichi's proposal to cut the consumption tax on food has raised market concerns about the government's ability to identify alternative revenue sources and address inflation. Strategists at DBS highlight a notable shift in Japan's policy backdrop, observing that Prime Minister Takaichi has become more supportive of raising interest rates to stabilize the JPY amid lower approval ratings and rising cost-of-living pressures.

From a technical perspective, EUR/JPY holds below the 100-day SMA in the daily chart. Price remains confined within the Bollinger Bands, sitting above the middle band support but under the upper band resistance. Initial resistance appears at the 100-day SMA near 185.10, ahead of the June 17 high of 186.32 and the upper Bollinger Band around 187.65.