Euro recovers strongly against Japanese Yen, German HICP in focus

• Euro rebounds to near 178.13 against the Japanese Yen as the latter comes under pressure.
• Fears of US-Japan joint intervention will likely keep the Asia-Pacific currency supported.
• Investors await the preliminary German HICP data for September.

The Euro (EUR) has recovered a majority of its early losses against the Japanese Yen (JPY), but is still 0.14% down at around 178.13 during the European trading session on Wednesday. The cross bounces back after testing the year-till-date (YTD) low at 177.35, as the Japanese Yen comes under pressure.

The outlook of the Asia-Pacific currency remains firm amid fears that the United States (US)-Japan could jointly intervene to support the currency against one-way excessive volatility.

Yen support seen as Trump voices concern over currency weakness

Analysts at MUFG note that recent media reports “stated that US President Trump voiced concern about yen weakness when meeting Japanese policymakers,” a development that “has reinforced expectations that they remain under pressure to help cap further upside for USD/JPY.” This political scrutiny adds to the sense that Japanese officials may be compelled to resist additional Dollar strength against the Yen.

Meanwhile, Japanese Finance Minister (FM) Satsuki Katayama also said on Tuesday that she agreed with United States (US) Treasury Secretary Scott Bessent to beef up cooperation when asked about phone talks on September 25. Katayama added, “I believe that undervalued Japanese Yen is problematic.”

On the Euro front, German Retail Sales data for August has come in weaker-than-expected. Retail Sales, a key measure of consumer spending, grew 1.3% Month-on-month (MoM), slower than 2% estimates. In July, the consumer spending measure declined by 3.2%, revised higher from -3.4%.

Later in the day, investors will focus on the German preliminary Harmonized Index of Consumer Prices (HICP) data for September, which will be published at 12:00 GMT. The HICP report is expected to show that price pressures accelerated to 3.1% Year-on-Year (YoY) from the final reading of 2.9% in August.