Euro dips against Yen on growing speculations over BoJ rate hikes

According to sources cited by Reuters, some BoJ policymakers are considering ending the negative rate. Officials are eyeing wage negotiations between big companies and unions on March 13. A significant increase in salaries could increase the odds of a rate hike by the BoJ as soon as the March 18-19 meeting.

Data-wise, the Gross Domestic Product (GDP) in Japan for the last quarter of 2023 indicated the economy dodged a recession, coming at 0.1% QoQ, exceeding estimates and the prior’s reading at  -0.1%. Annually based, GDP was 0.4%, less than expected, above the previous estimate of -0.4%.

In the Euro area (EU), the European Central Bank (ECB) held rates unchanged at last Thursday's meeting, though ECB President Christine Lagarde opened the door to easing policy in June. Initially, the EUR/JPY paired its losses, but it resumed its downtrend last Friday and carried onto Monday’s session.

During the European session, ECB’s Kazimir delivered hawkish remarks, pushing the first rate cut until June. He acknowledged that risks of inflation are “alive and kicking.” He added that discussions should already start and favor a “smooth and steady” cycle of policy easing.