EUR/JPY Stable Amid Intervention Risks and Hawkish Expectations

The EUR/JPY cross has stabilized around 180.25 during European trading hours on Monday, but traders remain vigilant for potential Japanese intervention to support the volatile yen.

Japan's markets are closed for a three-day holiday, resulting in low liquidity and heightened alertness among traders.

The Bank of Japan (BoJ) raised its policy rate by 25 basis points (bps) to 1.25%, but markets were disappointed with the lack of explicitly hawkish guidance, which weighed on the yen against the euro.

Swaps markets have priced in less than a 20% chance of a rate hike at the next BoJ meeting at the end of October and a 90% probability of another increase by December.