EUR/JPY spikes above 156.00 BoJ needs dovish policy for longer period

• EUR/JPY has registered a fresh 15-year high at 156.00 as BoJ’s ultra-dovish policy will continue further.
• BoJ Noguchi has warned that the effect of costly imported goods could disappear around September.
• ECB Lagarde has already confirmed one more interest rate hike in July.

The EUR/JPUY pair has climbed vertically above the crucial resistance of 156.00 in the European session. The cross has printed a fresh 15-year high at 156.32 as the Bank of Japan (BoJ) is expected to keep the interest rate policy dovish for a longer period.

The majority of the contribution to higher Japan’s inflation is coming from costly raw materials imported by firms, which indicates that the high-inflation environment is not domestically supported. The Bank of Japan (BoJ) has been keeping the interest rate policy expansionary to accelerate wages and spurt domestic demand.

The efforts of escalating wages by the BoJ through monetary stimulus are showing positive results. In the latest monthly assessment of Japan’s economy, the government has noted a decline in the jobless rate and the positive impact of bigger wage rises awarded by major firms, as reported by Reuters.   Special thanks to capital expenditure and consumer spending that the labor market conditions are "recovering moderately".

Meanwhile, BoJ policymaker Asahi Noguchi has warned that the effect of costly imported goods could disappear around September. He further added central bank must continue lower interest rates to ensure inflation remains well-supported above 2% through higher wages.

The Euro is in an upside momentum as Inflationary pressures in Eurozone are thrice the required rate of 2%. To achieve price stability, European Central Bank (ECB) President Christine Lagarde has already confirmed one more interest rate hike in July.