EUR/JPY climbs to two-week highs near 160.00 after BoJ interest rate decision, eye on ECB Lagarde speech

• EUR/JPY returns to near 160.00 in the first European session on Friday, gaining 0.45% on the day.
• The BoJ’s Ueda said the central bank will continue to adjust the degree of easing if our economic and price outlook is to be realized.
• Investors await ECB Lagarde’s speech for fresh impetus.

The EUR/JPY cross is gaining momentum around 160.00 during the European session on Friday. The Bank of Japan (BoJ) decided to keep its policy rate unchanged, as expected. However, the BoJ’s uncertain monetary policy outlook is likely to limit the Japanese yen’s (JPY) upside for the time being.

The BoJ kept its benchmark interest rate steady at around 0.25%, the highest level since 2008, at the end of a two-day meeting on Friday. The central bank is expected to raise interest rates in October and “further reduce monetary support this year despite a string of weak economic data,” said Stefan Angrick, associate director at Moody’s Analytics.

BoJ Governor Kazuo Ueda said during the press conference that the Japanese central bank “will continue to adjust the degree of easing if our economic and price outlook is to be realized.” Ueda added that uncertainties about Japan’s economy and prices remain high, and he will monitor the economy and market trends with an extremely high sense of urgency.

However, he said there is no change in his view that the BoJ will continue to raise rates if the economy moves in line with the outlook. Rising expectations that the BoJ will raise interest rates later this year could lift the JPY against the euro (EUR).

On the other hand, the European Central Bank (ECB) cut interest rates last week during the September meeting. Investors will take more cues from ECB President Christine Lagarde’s speech on Friday. Any conciliatory remarks from Lagarde could weigh on the common currency in the short term, while the dovish tone could lift the euro.