Analysts at ING expect the BOJ to hold off raising rates until early 2026 if Japan's tariff negotiations with the U.S. drag on longer than expected. But they add the timing could be pushed forward if underlying inflationary pressures build.

Eurozone sentiment supports the Euro amid a cautious ECB tone. The Japanese Yen remains pressured as the Bank of Japan adopts a dovish tone. The Euro (EUR) is pulling back against the Japanese Yen (JPY) on Tuesday after hitting a year-to-date high and its strongest level since July.

Following are excerpts from BOJ Governor Kazuo Ueda's comments at his post-meeting news conference, which was conducted in Japanese, as translated by Reuters: "It's desirable to continue tapering to allow yields to move more freely reflecting market forces. But tapering too rapidly could cause unintended impact on market stability."

The Bank of Japan may take a long pause before raising interest rates again, but it has still left scope for action this year by signaling caution over broadening price pressures that could sow the seeds of too-high inflation.

The Bank of Japan’s decision to hold interest rates and slow its withdrawal from the bond market was widely expected and should help reassure investors, though there will still be plenty of interest in Governor Kazuo Ueda’s press conference,