Euro Gains vs Yen on Tariff and Weak Japan Data

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: January 19, 2026

Key Moments

EUR/JPY traded near 183.60 during Asian hours on Monday after three straight sessions of declines.
EU ambassadors moved to counter U.S. tariff threats linked to opposition to President Trump’s Greenland proposal.
Japan’s Industrial Production fell 2.7% MoM in November 2025, the biggest drop since January 2024.

EUR/JPY Rebounds as Euro Gains From EU Tariff Response

EUR/JPY strengthened during Asian trading on Monday, rising after three days of losses and trading around 183.60. The pair found support as the Euro gained on a coordinated EU effort to counter U.S. trade measures.

EU diplomats said they agreed on Sunday to intensify pressure on President Trump to avoid tariffs. At the same time, they prepared possible retaliation if the tariffs go ahead.

Trump Links Tariffs to Opposition to Greenland Bid

On Saturday, President Trump tied potential tariffs to European resistance to his plan to buy Greenland. He said he would impose a 10% duty on goods from several European countries that oppose the proposal.

Bloomberg reported that the tariff would cover exports from Denmark, Sweden, France, Germany, the Netherlands, Finland, Britain, and Norway. The tariff would start on February 1 and stay in place until the U.S. can buy Greenland.

Country group	Tariff rate	Effective condition
Denmark, Sweden, France, Germany, the Netherlands, Finland, Britain, Norway	10%	From February 1 until the U.S. can buy Greenland

Japan Data Weakens as Industrial Output Falls Sharply

Japanese economic data showed weaker industrial activity. Industrial Production fell 2.7% MoM in November 2025. This was slightly worse than the preliminary 2.6% decline. It also wiped out October’s 1.5% gain and marked the biggest monthly drop since January 2024.

Japan Industrial Production	MoM change	Notes
October 2025	+1.5%	Prior increase
November 2025 (preliminary)	-2.6%	Initial estimate
November 2025 (final)	-2.7%	Largest drop since January 2024

BoJ Outlook and Fiscal Plans Support Yen, Capping EUR/JPY

Even though the Euro gained, EUR/JPY faced limits due to stronger Yen demand. The Yen benefited from expectations that the Bank of Japan may raise rates in the future. It also gained from hopes for more fiscal support under Prime Minister Sanae Takaichi.

The BoJ is expected to keep its policy rate at 0.75% at this week’s meeting. However, investors will watch for signals about a possible move in June. Last week, BoJ Governor Kazuo Ueda said the bank may raise rates if inflation and growth meet expectations.

Japan Signals Possible FX Intervention

Japanese authorities also warned they may act if the Yen weakens too much. Finance Minister Satsuki Katayama said Japan may coordinate with the U.S. to stabilize the currency. On Friday, she confirmed the government is considering all options, including direct intervention.

Tariffs – Frequently Asked Questions

What Are Tariffs?

Tariffs are taxes on imported goods. They aim to protect local industries by making imports more expensive. Along with quotas and trade barriers, tariffs are a common protectionist tool.

How Do Taxes Differ From Tariffs?

Both taxes and tariffs raise government revenue, but they work differently. Tariffs are collected when goods enter a country. Taxes are paid when people buy goods or earn income. Tariffs target importers, while taxes affect consumers and businesses.

Are Tariffs Good or Bad?

Economists disagree. Some say tariffs protect local jobs and reduce trade imbalances. Others argue tariffs raise prices and can trigger retaliation, which can hurt the economy.

Trump’s Tariff Plan Explained

During the 2024 campaign, Trump said he would use tariffs to support U.S. producers. In 2024, Mexico, China, and Canada made up 42% of U.S. imports. Mexico was the top exporter with $466.6 billion in goods. Trump plans to target these countries and use tariff revenue to lower personal income taxes.