Euro-Yen Stabilizes Amid Diverging Policy Expectations

The Euro-Yen currency pair has been holding near 184.70 as conflicting central bank rate expectations have capped its direction.

Markets are pricing in a roughly 80% probability of a Bank of Japan rate hike by September, which is supporting the Japanese Yen and capping upside in EUR/JPY.

The recent Eurozone inflation data has bolstered European Central Bank tightening bets, with core inflation rising to 2.5% from 2.4%.

Standard Chartered analysts have revised their expectations for the BoJ, moving forward their anticipated start to the tightening cycle and projecting a higher terminal rate of 1.75% in this cycle.