- EUR/JPY soars to near 159.60 amid a notable weakness in the Japanese Yen.
- BoJ Ueda warned that food prices could rise and impact inflation expectations.
- ECB Galhau cautioned that Trump’s tariffs would have negative impacts on the Eurozone.
The EUR/JPY pair extends its winning spell for the third trading day on Wednesday. The pair strengthens as the Japanese Yen (JPY) weakens across the board despite firm market speculation that the Bank of Japan (BoJ) will continue raising interest rates.
Japanese Yen PRICE Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.37% | 0.43% | 1.16% | 0.32% | 0.77% | 0.73% | 0.20% | |
| EUR | -0.37% | 0.06% | 0.78% | -0.05% | 0.38% | 0.34% | -0.18% | |
| GBP | -0.43% | -0.06% | 0.71% | -0.12% | 0.32% | 0.29% | -0.24% | |
| JPY | -1.16% | -0.78% | -0.71% | -0.80% | -0.36% | -0.41% | -0.93% | |
| CAD | -0.32% | 0.05% | 0.12% | 0.80% | 0.45% | 0.40% | -0.12% | |
| AUD | -0.77% | -0.38% | -0.32% | 0.36% | -0.45% | -0.04% | -0.57% | |
| NZD | -0.73% | -0.34% | -0.29% | 0.41% | -0.40% | 0.04% | -0.53% | |
| CHF | -0.20% | 0.18% | 0.24% | 0.93% | 0.12% | 0.57% | 0.53% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
The BoJ raised its key borrowing rates by 25 basis points (bps) to 0.5% in the January policy meeting as inflationary pressures remain well above the 2% target for longer. BoJ officials have also guided a hawkish monetary policy outlook on the assumption that wages would continue to grow.
Earlier in the day, BoJ Governor Kazuo Ueda warned that “food prices may continue to remain high” and will impact “people's mindsets and price expectations”, Reuters report.
Meanwhile, the Euro (EUR) outperforms its peers despite deepening fears of potential tariffs by United States (US) President Donald Trump on the Eurozone. Donald Trump is poised to announce reciprocal tariffs sooner and market participants expect that Eurozone will face higher levies on auto. The European Union (EU) charges 10% tariffs on imports of automobiles from the US and pays 2.5% import duty for domestic autos supplied to them.
In European trading hours, European Central Bank (ECB) policymaker and Bank of France head Francois Villeroy de Galhau warned that Trump’s trade policies would most likely have a "negative impact on the economy."
EUR/JPY bounces back strongly after revisiting the four-month low around 156.00. The asset retraces to near the 20-day Exponential Moving Average (EMA), which trades around 159.80. The 14-day Relative Strength Index (RSI) returns into the 40.00-60.00 range, which indicates that the bearish momentum has ended for now.
Going forward, a decisive move by the pair above the February 5 high of 160.30 would open doors for the February 3 high of 160.84, followed by the January 30 high of 161.80.
On the flip side, a downside move by the cross below the February 10 low of 155.67 would expose it to the August 5 low of 154.40 and 7 December 2023 low of 153.17.
EUR/JPY daily chart
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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