EUR/JPY rises above 181.50 as Japan’s Q4 2025 GDP grows below expectations

• EUR/JPY rises as the Japanese Yen weakens after Japan’s Q4 2025 GDP growth missed expectations.
• Japan’s economy rose 0.1% QoQ in Q4 2025, rebounding from -0.7% prior quarter but below 0.4% forecasts.
• The Euro gains as the ECB remains largely unconcerned about its recent appreciation.

EUR/JPY extends its gains for the second successive session, trading around 181.60 during the Asian hours on Monday. The currency cross appreciates as the Japanese Yen (JPY) loses ground after Japan’s Gross Domestic Product (GDP) data showed growth for the fourth quarter of 2025 came in well below expectations. Traders’ focus is shifted toward seasonally adjusted Eurozone Industrial Production data for December due later in the day.

The Japanese GDP expanded 0.1% quarter-over-quarter (QoQ) in Q4, rebounding from a 0.7% contraction in Q3 but missing forecasts for a 0.4% increase. On an annualized basis, Japan’s economy expanded 0.2%, compared with forecasts of 1.6% and the third quarter’s 2.3% decline. Moreover, Consumer spending, the largest component of GDP, rose just 0.1%, highlighting subdued domestic demand as households continued to grapple with elevated inflation.

The upside of the EUR/JPY cross could be restrained as the Japanese Yen (JPY) may find support from expectations that Prime Minister Sanae Takaichi’s fiscal expansion plans will spur growth without putting additional strain on public finances. Takaichi’s decisive election win eased political uncertainty and secured a mandate for higher spending and targeted tax cuts.

The Euro (EUR) gains against the Japanese Yen as the European Central Bank appears largely untroubled by the currency’s recent appreciation. ECB President Christine Lagarde said the euro area’s inflation outlook is in a “good place,” while cautioning against overreacting to short-term or volatile data.