EUR/JPY remains close to 158.50 as ECB keeps interest rates unchanged

• EUR/JPY juggles around 158.50 as the ECB kept its refinancing operations rate unchanged at 4.5%.
• The ECB was expected to maintain a status quo as inflation in Eurozone is consistently easing.
• Investors doubt that the sharp spike in early Europe was BoJ’s intervention.

The EUR/JPY pair remains unchanged near 158.50 after the announcement of the European Central Bank (ECB) monetary policy. ECB President Christine Lagarde announced that policymakers decided to keep the rate of refinancing operations unchanged at 4.5%.

The ECB has also kept the rate on deposit facility steady at 4%. An unchanged interest rate decision from the ECB was widely anticipated as the Eurozone economy is struggling for a firm footing amid geopolitical tensions and a soft demand outlook.

The business activities in Eurozone have been dampened due to soft demand by households as higher price pressures have squeezed their real income. The economic activities in the Eurozone economy have been contracting for a significant period as firms are operating at lower capacity due to weak demand.

Meanwhile, risks of higher energy prices outlook have dented market sentiment. Deepening Middle East tensions amid conflicts between Israel and Palestine are expected to disrupt the oil supply chain, which will raise energy prices in the shared continent. This could elevate headline inflation expectations.

On the Japanese Yen front, investors expect that a spike move in the EUR/JPY pair in the early London session was the stealth intervention in the FX domain. An intervention from the Bank of Japan (BoJ) or Japan’s Ministry of Finance (MoF) was expected as the Japanese yen depreciated to 150.00 against the US Dollar.