EUR/JPY Steadies Amid Expectations of BoJ Rate Hike

The EUR/JPY exchange rate has steadied around 184.70, with expectations of higher interest rates in Japan supporting the Japanese Yen and limiting its appreciation.

Investors are betting on another Bank of Japan (BoJ) interest-rate hike in September, with a Reuters report suggesting the BoJ may raise rates as soon as this month.

The overnight index swaps are pricing in around an 80% chance of a rate hike, which is supporting the Japanese Yen and keeping EUR/JPY's upside potential in check.

However, concerns surrounding Japan's public finances, particularly Prime Minister Sanae Takaichi's proposal to cut the consumption tax on food to 1% for two years without identifying an alternative source of revenue, are limiting the currency's appreciation.