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The EUR/JPY cross extends the rally to around 181.20 during the Asian trading hours on Thursday. The Japanese Yen (JPY) weakens against the Euro (EUR) amid market expectations that Japan’s Prime Minister Sanae Takaichi’s new administration will deliver a huge spending package backed by low interest rates. The German Producer Price Index (PPI) and Eurozone Consumer Confidence reports will be published later on Thursday.  The Kyodo news agency reported Japan’s stimulus package could exceed 20 trillion yen ($129 billion) and be funded by an extra budget of around 17 trillion yen. Goushi Kataokam, a member of a key government panel, said on Wednesday that the Bank of Japan (BoJ) is unlikely to raise interest rates before March, adding that policymakers must first confirm that a major fiscal package is boosting domestic demand.  These remarks indicated that the Takaichi government wants interest rates to remain low, which exerts some selling pressure on the JPY and creates a tailwind for the cross. A Reuters poll showed on Thursday that a narrow majority of economists expect the Japanese central bank to raise rates to 0.75% in December, with all forecasters seeing at least that level by the end of the first quarter (Q1).  However, verbal intervention from Japanese authorities might help limit the JPY’s losses. Japan’s Chief Cabinet Secretary Minoru Kihara said on Thursday that the recent FX moves are sharp and one-sided and that he is watching the FX market move with a high sense of urgency. Kihara further stated that the FX market needs to move stably, reflecting fundamentals.  The European Central Bank (ECB) has kept its key interest rates unchanged at its October meeting. Following the decision, many economists believe the easing cycle has ended for now and foresee rates on hold into 2026, barring major economic shocks. The cautious stance of the ECB could provide some support to the Euro…

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Filed under: News - @ November 20, 2025 5:26 am