Key Moments
- EUR/JPY trades near 184.60, gaining 0.58% as the Japanese Yen weakens amid questions over further BoJ tightening.
- Reports of the Japanese Prime Minister’s concerns about additional rate hikes have tempered market expectations for BoJ normalization.
- German data deliver a mixed picture, with softer consumer confidence and a downward revision to monthly HICP inflation.
EUR/JPY Rises as Yen Softens
EUR/JPY is trading around 184.60 on Wednesday at the time of writing, up 0.58% on the session, as the Japanese Yen (JPY) extends its decline against the Euro (EUR). The move reflects growing market uncertainty surrounding the trajectory and speed of monetary policy normalization in Japan.
BoJ Outlook Clouded by Political Concerns and Dovish Perception
According to local media reports, Japanese Prime Minister Sanae Takaichi expressed concerns about further rate hikes during her meeting last week with Bank of Japan (BoJ) Governor Kazuo Ueda. Although Ueda clarified that the discussion broadly covered economic and financial developments and that no specific monetary policy requests were made, the headlines have fueled market doubts about the BoJ’s ability to continue tightening policy at a steady pace.
The nomination of board members perceived as favoring accommodative policies is adding to the impression that any normalization process could be drawn out. This backdrop has led investors to reduce expectations for additional rate increases in Japan, putting renewed pressure on the Yen and, in turn, supporting the EUR/JPY cross.
ECB Signals Steady Stance While Eurozone Conditions Appear Stable
On the European side, the Euro is drawing support from a comparatively steady policy environment. European Central Bank (ECB) President Christine Lagarde recently stated that inflation in the Eurozone and the current interest rate stance are in a good place. She emphasized that decisions will continue to be taken meeting by meeting, based on incoming data, while describing the balance of risks as broadly balanced.
German Data Paint Mixed Macro Backdrop
Investors are assessing the latest German and broader Eurozone indicators, which present a nuanced growth and inflation outlook.
The GfK Consumer Confidence Survey for Germany for March deteriorated to -24.7 from a revised -24.2 in February, below expectations of -23.5. The decline underscores ongoing weakness in household sentiment.
At the same time, Germany’s Gross Domestic Product (GDP) for the fourth quarter was confirmed at 0.3% on a quarterly basis and 0.4% year-on-year, matching forecasts. The figures suggest that while Europe’s largest economy may be stabilizing, it has yet to show a clear return to stronger growth.
Inflation Revisions Reinforce Wait-and-See ECB Expectations
On the inflation side, the Harmonized Index of Consumer Prices (HICP) for Germany in January was revised down to -0.6% month-on-month from -0.5%, while the annual rate was confirmed at 1.7%. Core HICP was also confirmed at -1.1% MoM and 2.2% YoY.
The lower monthly headline reading highlights persistent disinflationary forces, even as core inflation remains comparatively firm on a yearly basis. This mix is reinforcing expectations that the ECB is likely to maintain a cautious, wait-and-see stance in the near term.
Euro Performance Against Major Currencies
The following table shows the percentage change of the Euro (EUR) against major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.05% | -0.11% | 0.55% | -0.05% | -0.32% | -0.02% | 0.08% | |
| EUR | 0.05% | -0.05% | 0.59% | 0.00% | -0.27% | 0.07% | 0.15% | |
| GBP | 0.11% | 0.05% | 0.66% | 0.05% | -0.22% | 0.11% | 0.20% | |
| JPY | -0.55% | -0.59% | -0.66% | -0.57% | -0.84% | -0.55% | -0.43% | |
| CAD | 0.05% | -0.00% | -0.05% | 0.57% | -0.27% | 0.03% | 0.15% | |
| AUD | 0.32% | 0.27% | 0.22% | 0.84% | 0.27% | 0.30% | 0.45% | |
| NZD | 0.02% | -0.07% | -0.11% | 0.55% | -0.03% | -0.30% | 0.11% | |
| CHF | -0.08% | -0.15% | -0.20% | 0.43% | -0.15% | -0.45% | -0.11% |
The heat map shows percentage changes of major currencies against each other. The base currency is taken from the left column, while the quote currency is taken from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change shown in the box represents EUR (base)/USD (quote).
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