EUR/JPY holds losses after the Bank of Japan policy decision.
The BoJ kept its short-term rate at 0.75% on Tuesday, as expected.
ECB is expected to keep its deposit rate at 2.0% on Thursday.
EUR/JPY remains subdued after two days of gains, trading around 186.40 during the Asian hours on Tuesday. The currency cross holds losses following the release of the Bank of Japan (BoJ) policy decision.
The Bank of Japan left its short-term rate unchanged at 0.75% after its two-day policy meeting Tuesday, in line with expectations. The decision passed 6–3, with board members Nakagawa, Takata, and Naoki Tamura dissenting and proposing a hike to 1.0%.
BoJ’s Nakagawa said while situation in middle east remained unclear, given economic developments, risks to prices were skewed to the upside under accommodative financial conditions. While, Takata said price stability target had been more or less achieved and that risks to prices in japan were already skewed to the upside due to the second-round effects of price rises stemming from overseas developments.
Economists expect the European Central Bank (ECB) to leave policy unchanged at Thursday’s meeting, maintaining its benchmark deposit rate at 2.0%, where it has remained since June last year.
ECB policymakers are likely to adopt a wait-and-see approach amid elevated economic uncertainty driven by the Middle East conflict. ECB official Martins Kazaks said last week that “we still have the large luxury of collecting data and forming our view.”
USD/CAD edges higher during the Asian session on Tuesday, though the upside seems limited.
The uncertainty over US-Iran peace talks revives USD demand and lends support to spot prices.
Elevated Oil prices underpin the Loonie and cap the pair ahead of the BoC/Fed rate decisions.
The USD/CAD pair reverses a modest Asian session dip on Tuesday and looks to build on the previous day’s modest rebound from sub-1.3600 levels, or the lowest since March 12. Spot prices currently trade around the 1.3630 region, though the upside potential seems limited amid a combination of diverging forces.
Mixed signals over US-Iran peace talks assist the US Dollar (USD) to attract some safe-haven flows and turn out to be a key factor acting as a tailwind for the USD/CAD pair. In fact, Iran reportedly gave the US a new proposal on reopening the Strait of Hormuz and ending the war, with nuclear negotiations postponed for a later stage. However, the Wall Street Journal reported that US President Donald Trump was skeptical about Iran not dealing in good faith or being open to meeting his key demand of ending nuclear enrichment.
Meanwhile, continued disruptions to shipping through the critical Strait of Hormuz remain supportive of elevated Crude Oil prices, which underpins the commodity-linked Loonie and keeps a lid on the USD/CAD pair. Traders also seem reluctant to place aggressive directional bets and might opt to move to the sidelines ahead of this week’s key central bank event risks. The Bank of Canada (BoC) is scheduled to announce its policy decision on Wednesday, and will be followed by the outcome of the highly anticipated two-day FOMC meeting.
Investors will look for fresh cues about the future policy outlook amid expectations that the war-driven surge in energy prices will rekindle inflationary pressures. This, in turn, will play a key role in determining the next leg of a directional move for the USD/CAD pair. The mixed fundamental backdrop, in turn, makes it prudent to wait for strong follow-through buying before confirming that the pair’s recent fall, witnessed since the beginning of this month, has run its course and positioning for any meaningful recovery in the near term.
GBP/USD drifts lower to near 1.3525 in Tuesday’s early Asian session.
Fed is widely expected to leave rates unchanged at 3.50%–3.75% at its April meeting on Wednesday.
The BoE is likely to keep rates on hold on Thursday.
The GBP/USD pair trades in negative territory around 1.3525 during the early Asian session on Tuesday. The Pound Sterling (GBP) softens against the US Dollar (USD) as traders prefer to wait on the sidelines ahead of the Federal Reserve (Fed) and the Bank of England (BoE) later this week.
The Fed is likely to keep the federal funds rate between 3.50% and 3.75%, where it has sat since January. Deutsche Bank analysts noted a repricing of Fed policy toward a more hawkish stance, driven by persistent oil-related inflation.
Traders will closely watch Jerome Powell’s press conference after the meeting for fresh impetus. Any hawkish comments from Fed officials could provide some support to the Greenback and create a headwind for the major pair.
Markets expect the UK central bank to keep interest rates on hold on Thursday, and traders will be watching for any signs it is moving towards raising rates. Analysts see the UK economy as particularly vulnerable to the rise in energy prices caused by the war due to the country’s heavy use of natural gas.
“Our baseline forecast assumes Bank Rate will remain on hold for the rest of the year,” said Edward Allenby, senior UK economist at Oxford Economics. “The committee will have more information about how the energy shock is feeding through to the economy by the end-July meeting,” Allenby added.
AUD/JPY loses ground to around 114.30 in Tuesday’s Asian session.
BoJ kept the policy rate unchanged at 0.75% at its April policy meeting on Tuesday.
The Australian March CPI inflation report will be the highlight later on Wednesday.
The AUD/JPY cross declines to near 114.30 during the Asian trading hours on Tuesday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) after the Bank of Japan’s (BoJ) interest rate decision. Traders will closely monitor Governor Kazuo Ueda’s press conference for any hints about the next move.
As widely expected, the BoJ decided to hold the short-term interest rate steady at 0.75% after concluding its two-day monetary policy review meeting on Tuesday. According to the BoJ’s policy statement, the central bank will continue to raise interest rates in accordance with developments in the economy, prices, and financial markets. It said wages and prices may face upward pressure more than what the output gap suggests. The BoJ will scrutinize the timing and pace of policy adjustment with a close eye on economic and price impact from Middle East war developments.
The attention will shift to the BoJ’s Governor Kazuo Ueda press conference for more clues about the interest rate path in Japan. Any hawkish comments from policymakers could lift the JPY and act as a headwind for the cross.
On the Aussie front, the Reserve Bank of Australia (RBA) is anticipated to raise the Official Cash Rate (OCR) for a third consecutive time at its next meeting on May 5, 2026. Markets are pricing in a 74% chance of another 25-basis-point increase to 4.35% in the May policy meeting, according to Reuters.
Traders will take more cues from the Australian March Consumer Price Index (CPI) inflation data on Wednesday for fresh impetus. The headline CPI is projected to show a rise of 4.7% YoY in March, compared to 3.7% in February. Any signs of hotter inflation in Australia could lift the Aussie against the JPY.
GBP/JPY trims intraday gains as the British Pound softens on UK political uncertainty.
Markets await the BoE and BoJ monetary policy decisions due this week.
Technicals remain bullish above key SMAs, though momentum shows signs of cooling.
GBP/JPY gives back part of its earlier gains on Monday as the British Pound (GBP) comes under pressure following reports that UK Prime Minister Keir Starmer will face a parliamentary vote on a possible probe into whether he misled lawmakers over the appointment of Peter Mandelson as ambassador to the United States.
However, the downside remains limited as the Japanese Yen (JPY) continues to underperform most of its major peers, with elevated Oil prices weighing on the currency given Japan’s heavy reliance on imported energy.
At the time of writing, GBP/JPY is trading around 215.67, easing slightly after hitting 216.06, its highest level since January 2008, while the wide interest rate differential between the Bank of England (BoE) and the Bank of Japan (BoJ) keeps the broader bias tilted to the upside.
Attention now turns to upcoming monetary policy meetings due this week, with both the BoE and the BoJ widely expected to hold rates steady as policymakers assess the impact of rising Oil prices on inflation and economic growth.
The BoJ’s slow pace of policy normalization is likely to keep the Yen on the defensive, although lingering intervention risks could limit further weakness amid repeated warnings from Japanese officials, with USD/JPY hovering close to the 160 mark.
In the daily chart, GBP/JPY keeps a bullish near-term bias as it holds well above both the 21-day simple moving average (SMA) at 213.60 and the 50-day SMA at 212.24. The positive but moderating Relative Strength Index (RSI) around 65 and a still-positive Moving Average Convergence Divergence (MACD) histogram hint that upside momentum persists, though the pace of the advance is losing some steam as the cross consolidates near recent highs.
On the downside, initial support is seen at the 21-day SMA at 213.60, with a deeper pullback likely finding additional demand near the 50-day SMA at 212.24. As long as GBP/JPY holds above these moving averages, the broader bullish structure remains intact, and any dips toward this support band may be treated as corrective rather than signaling a sustained reversal.
(The technical analysis of this story was written with the help of an AI tool.)
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Swiss Franc.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
-0.14%
-0.08%
-0.06%
-0.43%
-0.49%
-0.51%
-0.03%
EUR
0.14%
0.08%
0.09%
-0.28%
-0.32%
-0.35%
0.13%
GBP
0.08%
-0.08%
0.00%
-0.38%
-0.43%
-0.45%
0.05%
JPY
0.06%
-0.09%
0.00%
-0.35%
-0.42%
-0.46%
0.09%
CAD
0.43%
0.28%
0.38%
0.35%
-0.06%
-0.10%
0.41%
AUD
0.49%
0.32%
0.43%
0.42%
0.06%
-0.01%
0.47%
NZD
0.51%
0.35%
0.45%
0.46%
0.10%
0.01%
0.49%
CHF
0.03%
-0.13%
-0.05%
-0.09%
-0.41%
-0.47%
-0.49%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
MUFG analysts note that EUR/GBP has drifted lower within a 0.8600–0.8800 range as the Pound (GBP) outperforms the Euro (EUR). The euro-zone faces weaker PMIs and rising stagflation risks, while stronger United Kingdom (UK) data and sticky inflation have markets pricing more BoE tightening. They see scope for several Monetary Policy Committee (MPC) members to vote for a hike, keeping EUR/GBP under pressure.
Pound supported by stronger UK data
“The initial negative impact of the energy price shock on the euro‑zone economy was evident in the latest PMI surveys for April. The surveys showed that business confidence fell sharply in the services sector, while holding up better among manufacturers. The euro‑zone services PMI declined by 2.8 points to 47.4 in April, whereas the manufacturing PMI rose by 0.6 points to 52.2.”
“For the euro‑zone economy as a whole, the composite PMI dropped by 2.1 points to 48.6, marking its weakest level since November 2024. The index has now fallen by 3.3 points since February, prior to the Middle East conflict. Business confidence has deteriorated more quickly than during the previous energy price shock triggered by Russia’s invasion of Ukraine in early 2022 and is already at much weaker levels.”
“The GBP has held up better than the EUR over the past week, placing modest downward pressure on EUR/GBP, although the pair has remained within a relatively tight 0.8600–0.8800 range since the conflict began. The GBP has been supported by further evidence that the UK economy started the year with more underlying momentum than previously expected, while the initial negative impact of the energy price shock has so far appeared limited.”
“Stronger growth momentum has increased the risk of a hawkish policy update from the BoE this week. The UK rate market has moved to price back in more tightening from the BoE, and the uplift for UK yields has provided more support for the GBP. The 2-year government bond yield in the UK has increased by around 30bps from the recent low compared to around 20bps in the euro-zone and just over 10bps in the US.”
HSBC strategists highlight that the Japanese Yen (JPY) has been the weakest G10 currency month-to-date, with USD/JPY trading in an unusually narrow range despite Japan’s large net energy import status and Gulf exposure. They argue a cautious Bank of Japan (BoJ) and domestic fiscal issues may delay USD/JPY’s move lower, although intervention risks and portfolio inflows should cap upside. HSBC’s base case still sees USD/JPY declining by year-end.
BoJ caution and fiscal strains vs caps
“Bearish sentiment towards JPY is consistent with Japan’s macro exposure. Japan is the largest net energy importer among advanced economies (scaled by GDP) and has deep economic ties with the Gulf region.”
“Despite these headwinds, USD-JPY has traded in an unusually narrow range recently. A cautious Bank of Japan (BoJ) and domestic fiscal challenges may delay USD/JPY’s convergence lower towards levels implied by rate differentials.”
“Key fiscal watchpoints include the possibility that funding for fuel subsidies may run out in mid/late May and that a supplementary budget may be proposed.”
“Offsetting factors include net portfolio inflows (foreign buying of Japanese equities and bonds month-to-date in April, alongside Japanese selling of foreign bonds) and firm verbal intervention from the Ministry of Finance, may help cap USD/JPY.”
“Our base case remains for USD/JPY to decline by year-end. Near-term upside risks include a more dovish BoJ, a more hawkish Federal Reserve (Fed), escalation in the Middle East conflict and renewed oil-price highs, and further fiscal slippage in Japan.”
AUD/USD rallies more than 0.5% to reach session highs near 0.7200.
Moderate hopes of a US-Iran peace deal are feeding a mild risk appetite on Monday.
The US Fed decision and Australian CPI will gather investors’ focus this week.
The Australian Dollar (AUD) accelerates its rally against a weak US Dollar (USD) on Monday, reaching 10-day highs at 0.7190 at the time of writing, after bouncing from lows near 0.7100 last week. News of a peace proposal from Tehran and hopes that high energy prices will boost inflation and force the Reserve Bank of Australia (RBA) to hike rates next week are keeping the Aussie buoyed.
A report published by Axios earlier on Monday, citing a US official and sources related to the matter, affirmed that Tehran has sent a peace proposal to the US, offering to end the war and reopen the Strait of Hormuz, and to postpone nuclear conversations to a later stage. This news helps sustain hopes of a negotiated end to the conflict and adds weight to the US Dollar.
Central banks return to the focus
The US Federal Reserve (Fed) will also come into focus this week. The US central bank’s Federal Open Market Committee (FOMC) meets on Wednesday and is widely expected to leave interest rates unchanged at the 3.50%-3.75% rate.
The bank is also likely to hint at a steady policy for the next few months. The rising inflationary pressures stemming from Iran’s war have prompted markets to dial down hopes of interest rate cuts this year, and the CME Fed Watch Tool shows that futures markets price a 66% chance that monetary policy will remain on hold by the end of the year. Investors were betting on between one and two rate cuts before the war started.
Before that, Australian Consumer Price Index (CPI) figures will provide further insight about next week’s RBA decision. Inflation is expected to have accelerated in the first month of the US-Iran war, boosting speculation that the central bank might hike interest rates for the third consecutive time in May. These rumours are keeping the Aussie Dollar close to multi-year highs against the US Dollar.
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