EUR/JPY Slips on Diverging Inflation, Policy Outlook

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: February 27, 2026

Key Moments

EUR/JPY trades near 184.00, down 0.10% and extending losses into a second session as the Yen firms.
Tokyo CPI excluding fresh food rises 1.8% YoY, dropping below the BoJ’s 2% target for the first time since 2024.
German CPI eases to 1.9% YoY, missing the 2% consensus and reinforcing expectations for ECB policy easing.

Yen Strength Weighs on EUR/JPY

EUR/JPY is trading around 184.00 on Friday at the time of writing, down 0.10% on the day and marking a second consecutive decline. The cross is facing selling pressure as the Japanese Yen (JPY) strengthens following the latest inflation data out of Tokyo.

Tokyo’s Consumer Price Index (CPI) increased 1.6% year-on-year in February, compared with 1.5% previously. The index excluding fresh food rose 1.8% year-on-year, beating expectations of 1.7% but easing from 2% in the prior month. This measure has now fallen below the Bank of Japan’s (BoJ) 2% target for the first time since 2024. The gauge excluding both fresh food and energy slowed to 1.8% year-on-year from 2%.

BoJ Signals Gradual Tightening

Despite the moderation in some inflation components, overall price pressures remain high by historical standards, helping sustain expectations for a gradual tightening in monetary policy. BoJ Governor Kazuo Ueda reiterated that interest rates will continue to rise if economic and inflation projections materialize. Board member Hajime Takata also stressed that further hikes should proceed gradually. These comments underpin support for the Japanese Yen and cap the near-term rebound potential for EUR/JPY.

German Inflation Cools, Pressuring the Euro

On the European side, Germany’s Consumer Price Index advanced 0.2% month-on-month, below the 0.5% expected and slightly above the prior 0.1% increase. On a yearly basis, CPI slowed to 1.9%, undershooting expectations of 2% and easing from 2.1% previously.

The Harmonized Index of Consumer Prices (HICP), the European Central Bank’s (ECB) preferred inflation measure, rose 0.4% month-on-month. This was below the 0.5% forecast but represented a rebound from -0.1% in January. On an annual basis, HICP edged down to 2%, compared with 2.1% previously and expectations of 2.1%.

The weaker-than-anticipated inflation data may reinforce expectations for further monetary easing by the ECB, which could add pressure on the Euro (EUR). However, ECB President Christine Lagarde recently told the European Parliament’s Committee on Economic and Monetary Affairs that inflation is on track to stabilize around the 2% target over the medium term. She reiterates that interest rate decisions will remain data-dependent and taken on a meeting-by-meeting basis.

Policy Divergence and Risk Sentiment Drive Outlook

Against this backdrop, the near-term path for EUR/JPY is likely to be shaped by the evolving policy divergence between the BoJ and the ECB, alongside broader market risk sentiment. Firmer Japanese inflation relative to targets in recent history and signals of gradual BoJ tightening contrast with softening German and Eurozone inflation readings and rising expectations of ECB easing.

Euro Performance Against Major Currencies

The table below shows the percentage change of the Euro (EUR) against major currencies today. According to the data, the Euro has been strongest versus the British Pound.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD	—	0.01%	0.16%	-0.11%	-0.05%	0.10%	0.12%	-0.24%
EUR	-0.01%	—	0.15%	-0.17%	-0.06%	0.08%	0.10%	-0.25%
GBP	-0.16%	-0.15%	—	-0.29%	-0.21%	-0.08%	-0.05%	-0.40%
JPY	0.11%	0.17%	0.29%	—	0.10%	0.23%	0.24%	-0.12%
CAD	0.05%	0.06%	0.21%	-0.10%	—	0.14%	0.15%	-0.20%
AUD	-0.10%	-0.08%	0.08%	-0.23%	-0.14%	—	0.02%	-0.35%
NZD	-0.12%	-0.10%	0.05%	-0.24%	-0.15%	-0.02%	—	-0.36%
CHF	0.24%	0.25%	0.40%	0.12%	0.20%	0.35%	0.36%	—

The heat map reflects the percentage changes of major currencies against one another. The base currency is taken from the left-hand column, and the quote currency from the top row. For example, selecting the Euro as the base from the left column and moving horizontally to the US Dollar column will show the percentage change for EUR (base)/USD (quote).