• EUR/JPY remains under pressure as the Japanese Yen strengthens on renewed speculation of potential official intervention.
• The JPY gains support as the BoJ may be preparing for a rate hike next month.
• The Euro draws support from the European Central Bank’s cautious policy stance.

EUR/JPY retraces its recent gains registered in the previous session, trading around 181.00 during the European hours on Thursday. The currency cross is under pressure as the Japanese Yen (JPY) strengthens on renewed speculation of official intervention.

With US markets closed for Thanksgiving, traders view the holiday period as a potential window for Japanese authorities to step in to support the JPY, though even the threat of intervention has already helped limit further Yen weakness.

Meanwhile, investors are also reassessing the Bank of Japan (BoJ) outlook after reports suggested the central bank may be preparing for a rate hike next month, amid concerns over stubborn inflation, a depreciated Yen, and reduced political resistance to tightening policy.

The downside in EUR/JPY may remain limited as the Euro (EUR) finds support from the European Central Bank’s (ECB) cautious policy stance. Most economists expect the ECB to keep its deposit rate unchanged through the end of this year and see no adjustments by the end of next year. Traders will closely examine upcoming data releases, including consumer and business confidence surveys, Eurozone inflation expectations, and lending activity figures.

ECB Vice President Luis de Guindos struck a mildly upbeat tone on growth on Wednesday, stating that current interest rates are appropriately positioned. Meanwhile, Croatian central bank governor Boris Vujcic stressed that further rate cuts should only be considered if inflation is clearly moving below target without signs of a rebound. ECB Chief Economist Philip Lane also emphasized that a sustained slowdown in non-energy inflation is needed to ensure overall price growth remains close to the 2% target.