Senior Analyst at Danske Bank Jens Pedersen argued that the recent price action in EUR and JPY is putting the ECB and the BoJ under further pressure. Key Quotes “EUR/USD and USD/JPY stabilised overnight despite further sell-offs in equity markets”. The main turnaround yesterday was a strong bounce in USD/JPY, which instantly jumped from below 111.50 to above just 113 on BoJ intervention rumours (intervention has not been confirmed by the central bank)”. “Japanese policymakers have been saying that they are watching the FX market closely and that the movements have been rough suggesting that FX intervention is one of the options that the BoJ may consider”. “Given the pace of JPY appreciation, BoJ actions could be imminent. In a continued negative risk environment we would expect safe-haven demands to pick up again and thus both the EUR and JPY should remain supported”. “However, the strength of both EUR and JPY is a increasing challenge for both the ECB and BoJ and we now expect the ECB to combine a 10bp rate cut in March with an introduction of a two-tier deposit rate system and also front-loading of the current QE programme”. “We also think it is likely that the BoJ will cut interest rates further into negative at its meeting on 15 March – if not earlier”. For more information, read our latest forex news.