• EUR/JPY refreshes weekly high near 160.50 on BoJ Shinichi’s dovish commentary.
• The BoJ may exit from its expansionary policy stance only after the wage cycle heightens.
• The Eurozone economy might remain stagnant in the fourth quarter of 2023.

The EUR/JPY prints a fresh weekly high near 160.50 in the European session on Thursday after dovish commentary from Bank of Japan (BoJ) Deputy Governor Uchida Shinichi. BoJ Shinichi said the central bank would be reluctant to raise interest rates aggressively despite exiting the decade-long ultra-dovish monetary policy.

Uchida Shinichi added that monetary policy conditions in the Japanese economy are in a deep negative trajectory, which is not expected to get blown up aggressively.

The Japanese Yen has been under pressure as BoJ policymakers run behind the market’s expectations of adopting a neutral stance. Slower wage growth momentum has been limiting hopes of exiting from an easy policy stance, limiting the sustainability of price pressures above 2%. Meanwhile, deepening geopolitical tensions have escalated uncertainty over restrictive policy stance