Euro rises against Japanese Yen following PMI data

• EUR/JPY advances as German and Eurozone PMI data support the Euro.
• The Eurozone Composite PMI rose to 52.0 in July, signaling a rebound into economic expansion.
• Japan's Cabinet Secretary Minoru Kihara emphasized Wednesday that specific monetary policy decisions rest entirely with the Bank of Japan.

EUR/JPY holds ground after registering over 0.5% gains in the previous day, trading around 182.00 during the European hours on Wednesday. The currency cross inches higher as the Euro (EUR) receives support following the release of HCOB Purchasing Managers’ Index (PMI) data from Germany and the Eurozone.

The HCOB Eurozone Composite PMI rebounded into expansion territory in July, rising to 52.0 from June's neutral 50.0 mark. This signals the first increase in regional business activity since March and the sharpest rate of growth in eight months. Driving this turnaround, the Eurozone Services PMI advanced from 49.4 in June to 51.7 in July, snapping a three-month streak of decline with its fastest growth rate since February.

Germany's Composite PMI also returned to growth for the first time since March, rising to 51.3 in July from 49.5 in June. Meanwhile, Germany's Services PMI edged up to 49.8 from 48.6, remaining just below the neutral 50.0 threshold. Though still slightly contracting, this represents the mildest decline in German service sector activity since the downturn began in April.

Yen support reinforced by Japan policy moves and BoJ guidance

According to TD Securities, the recent moves in Dollar-Yen have unfolded largely in line with their earlier assessment that "the JPY was in need of near-term domestic policy support." They note that this support arrived swiftly, as "the MoF intervention materialized shortly after our report," while the July BoJ meeting further underpinned the currency by delivering "hawkish forward guidance."

Japanese Chief Cabinet Secretary Minoru Kihara addressed monetary policy matters on Wednesday, emphasizing that specific policy decisions remain strictly within the purview of the Bank of Japan (BoJ). While declining to comment on recent remarks made by US Treasury Secretary Scott Bessent regarding the yen, Kihara stated that the government expects the central bank to conduct appropriate monetary policy—in close coordination with the government—to sustainably and stably achieve its price targets.

Additionally, the Chief Cabinet Secretary refrained from commenting on recent reports suggesting that Prime Minister Takaichi requested BoJ Governor Kazuo Ueda to purchase Japanese government bonds (JGBs).