The EUR/JPY has been rising steadily, reaching its highest level since August 1992. This currency pairing is currently trading just below the 179.00 mark, with a daily increase of approximately 0.25%.
A major factor influencing this is the Bank of Japan’s (BoJ) uncertain monetary trajectory. The BoJ’s stance contrasts with the pro-stimulus policies favoured by Japan’s Prime Minister.
Japan Stimulus Package
Japan’s government plans to finalise a stimulus package by November 21, aimed at economic growth and stable prices. Meanwhile, the euro is buoyed by expectations that the European Central Bank (ECB) has ceased further rate cuts.
Technically, after surpassing the 178.25-178.30 resistance, the EUR/JPY could aim higher, possibly reaching the 180.00 threshold. Additionally, the Japanese Yen has been underperforming, particularly against the British Pound.
A currency heat map shows percentage changes across major currencies, revealing the Japanese Yen’s weakness. The analysis and figures provide a snapshot of the current market, with detailed comparative data offered to better understand FX trends.
Given the EUR/JPY cross has broken to its highest level in over three decades, we see a clear path for further gains in the coming weeks. The fundamental story is straightforward, with a European Central Bank that has signaled an end to its rate-cutting cycle and a Bank of Japan still hesitant to tighten policy. This policy divergence is the primary engine driving the pair toward the 180.00 mark.
Eurozone Inflation and Currency Strategy
The Euro’s side of the equation looks solid. We’ve seen recent data showing Eurozone core inflation holding firm at 2.1% for October 2025, just above the ECB’s target, which supports the view that further rate cuts are off the table for now. This stability in European monetary policy provides a strong foundation for the currency against a much weaker Yen.
On the other hand, the Japanese Yen remains under pressure due to domestic economic concerns. Japan’s latest Q3 2025 GDP figures showed a slight annualized contraction of -0.1%, justifying the government’s push for a new stimulus package expected around November 21. This focus on fiscal stimulus over monetary tightening suggests the BoJ’s hands are tied, keeping borrowing costs low and the Yen weak.
For derivative traders, this environment makes long positions via call options or futures on EUR/JPY particularly compelling. Buying call options with a strike price at or above 180.00 for December or January expiry allows for capturing continued upside while limiting downside risk. The technical breakout above the 178.30 level has cleared the way for this next psychological milestone.
We are witnessing a return to the classic carry trade dynamics that dominated markets in the mid-2000s, where traders borrow in a low-interest-rate currency like the Yen to invest in a higher-yielding one. Recent positioning data confirms this, with large speculators increasing their net short Yen positions to the highest level seen since early 2024. The overwhelming market sentiment is aligned for further Yen weakness.
While the trend is strong, traders should watch for verbal intervention from Japanese officials, which becomes more likely as the pair approaches major figures like 180.00. However, looking back at intervention attempts in 2023 and 2024, their effects were often temporary when not supported by a fundamental policy shift from the BoJ. The key risk remains a sudden change in global risk sentiment, but the current momentum appears well-supported.
