BoJ likely to keep monetary policy on hold in July, EUR/JPY to trade in range of 127-131 in months ahead

The Bank of Japan is expected to keep its ‘QQE with yield curve control’ policy on hold during its monetary policy meeting this week, noted Danske Bank in a research report. It is widely expected that the Bank of Japan would keep its monetary policy unchanged, particularly after if earlier this month demonstrated its solid commitment to yield curve control by announcing an unlimited fixed-rate purchase of 10Y JGBs. The announcement should not have any considerable effect on price actions, stated Danske Bank.

According to Danske Bank, EUR/JPY to trade in the range of 127-131 in months ahead, targeting 128.8 in 1-3 months. The ECB is likely to deliver just a minor hawkish twist during its July meeting, which if anything, might contribute to the upside risks for EUR/JPY.

“Longer term, we expect EUR/JPY to continue higher driven by real interest rates and portfolio outflows out of Japan as we expect the ECB to move towards monetary policy 'normalisation' before the BoJ. We target EUR/JPY at 133.4 in 6M and 136.88 in 12M”, added Danske Bank.

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest