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EUR/JPY remains subdued near 184.00 due to rising BoJ rate hike bets

March 26, 2026

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EUR/JPY holds losses as the Japanese Yen gains on rising BoJ hike expectations driven by oil-led inflation shock.
Rising JGB yields signal tighter financial conditions and expectations of higher BoJ interest rates.
The Euro may gain support from hopes of Middle East conflict de-escalation.

EUR/JPY halts its four-day winning streak, trading around 184.20 during the European hours on Thursday. The currency cross holds losses as the Japanese Yen (JPY) draws support from rising expectations of a near-term rate hike by the Bank of Japan (BoJ). These expectations are being driven by an oil-led inflation shock tied to the Middle East conflict, with global central banks signaling readiness to tighten amid persistent price pressures.

While the BoJ held its policy rate steady in March, Governor Kazuo Ueda left the door open for a potential move in April. Meanwhile, Japan’s Government Bond yields moved higher, with the 10-year rising to 2.27% on Thursday, snapping a two-day decline. Shorter maturities also advanced, with 2-year yields hitting three-decade highs and 5-year yields reaching record levels. The rise in Japan’s government bond yields points to tightening financial conditions and growing expectations of higher interest rates.

The BoJ January Meeting Minutes indicated that policymakers agreed that, with real interest rates still deeply negative, further rate hikes would be appropriate if economic and inflation projections are met. Most members also emphasized a flexible approach, favoring decisions at each meeting rather than committing to a fixed pace of tightening.

The EUR/JPY cross may regain its ground as the Euro (EUR) could find support from hopes of de-escalation in the Middle East conflict. The White House said talks are ongoing, with the Trump administration reportedly sending a 15-point proposal to Iran via Pakistan.

While senior Iranian officials are reviewing the proposal, they signaled no willingness to engage directly with Washington. Tehran is also expected to reject a US ceasefire offer, instead proposing a five-point plan that includes sovereign control over the Strait of Hormuz.

European Central Bank (ECB) President Christine Lagarde said the central bank is assessing the conflict’s economic impact and remains ready to adjust policy at any meeting if energy-driven inflation risks broaden.