EUR/JPY edges higher, approaching 184.00 as Yen broadly softens

Yen Weakens Further Amid Holiday Trading

During the quiet holiday market on Wednesday, the Japanese Yen continued to underperform among major currencies. The EUR/JPY pair moved close to 184.00 by midday in Europe, rebounding from the 183.50 level seen on Tuesday.

From a broader viewpoint, the currency pair remains stable and not far from its long-term peak near 185.00, which was reached earlier this month. The pair is set to finish the year with a gain of over 14%.

Bank of Japan’s Cautious Approach Pressures the Yen in 2025

The Yen has faced significant headwinds in 2025, largely due to the Bank of Japan’s slow approach to tightening monetary policy. Additional challenges include worries about potential tariffs from the Trump administration targeting Japan’s export sector, as well as expansive fiscal policies under Prime Minister Sanae Takaichi. These factors have combined to make the Yen the weakest among major currencies this year.

The most recent Bank of Japan meeting summary reiterated the central bank’s intention to continue tightening policy. However, the timeline for future rate increases remains unclear, and government resistance suggests that any policy normalization will be gradual. As a result, the Yen is unlikely to see significant gains in the near term.

Meanwhile, in Europe, the European Central Bank has indicated that its period of monetary easing has ended, with a rate hike expected, possibly in the latter half of next year. This outlook has recently provided support for the Euro.