EUR/JPY trades at top of range as Euro remains supported by ECB’s wait-and-see stance

EUR/JPY trades near the top of a ten-week range as the Euro remains supported by ECB Kazimir’s comments. 

Kazimir said the governing council would be watching the data closely in December and decide then what to do. 

The Yen comes under pressure as analysts see it at fair value and the governing ADP party underperforms in opinion polls. 

EUR/JPY is trading at the top of a ten-week range in the upper 162.00s on Monday as the Euro (EUR) retains strength after comments from a European Central Bank (ECB) official suggested policymakers may not be in such a rush to lower interest rates whilst the Japanese Yen (JPY) remains under pressure following the release of lower-than-expected inflation data last week. 

ECB policymaker and Slovakian central bank Governor Peter Kazimir noted on Monday that the December policy meeting is wide open, with all options remaining on the table. "If new information points in the direction of higher inflation risks, we can still slow down the pace at which we remove restrictions in the coming meetings," he said. 

Kazimir also said that the ECB will be in a "strong and comfortable position" to continue the policy-easing cycle if the accelerated pace in disinflation is confirmed, per Reuters.

His comments follow more dovish market assessments of the trajectory of interest rates in the Eurozone after the ECB’s decision to cut its prime rates by 25 basis points (bps) (0.25%) at its meeting last Thursday. 

Many analysts saw the ECB’s decision to enact two rate cuts in a row as a sign that the bank was accelerating its easing cycle and would therefore be likely to follow up with a cut and each of its next meetings until it had brought interest rates down to the “neutral level” of around 2.00%.

EUR/JPY keeps its upside as the Yen remains under pressure after opinion polls show the ruling ADP party lacks support and risks being replaced by the opposition who are likely to pursue a low-interest rate policy, according to Bloomberg News. The expectation of lower interest rates is likely to be negative for the Yen as it increases foreign capital outflows.