The euro hit a fresh all time high against the yen as the Japanese currency struggled after the Bank of Japan kept interest rates unchanged earlier today. The euro reached a fraction above 160.0 yen, at 160.03 yen, before easing a touch. Carry trades, which take advantage of the low interest rates in Japan, were said to be at work again, especially at a time when the European Central Bank is still very much in policy-tightening mode. BoJ governor Toshihiko Fukui's comments in the news conference following the no-change verdict were interpreted as somewhat dovish. He said it was difficult to project the path of interest rates and that core inflation may hover near zero over the coming months. "The recent drop in CPI and weaker Tankan outlook have left the BoJ with little alternative but to accept pared-back rate expectations or risk another backlash from lawmakers," said Daniel Katzive at UBS. While Fukui also said he sees no reason for the carry trade to pick up, the opposite appears to be happening. "With BoJ expectations stable, currency market volatility subsiding and risk aversion abating, carry trades are recovering, keeping the yen under pressure," said Katzive. He sees no immediate catalyst for a yen recovery. "Markets may get a bit more cautious heading into the G7 meeting concluding late on Friday, but we are not looking for market-moving developments, with the German Finance Ministry noting this morning that no big surprises are expected," he added.