EUR/JPY jumps to near 163.00 as EU-US trade tensions de-escalate
- EUR/JPY trades firmly as the Euro gains on diminished trade tensions between the EU and the US.
- US President Trump suspended 50% of EU tariffs until July 9.
- The Japanese Yen underperforms despite hot Japan National CPI data for April.
The EUR/JPY pair is up 0.45% to 162.60 in European trading hours on Monday, touches a high of 163.00 during the day. The cross strengthens as investors underpinned the Euro (EUR) against the Japanese yen (JPY) on de-escalation in trade tensions between the United States (US) and the European Union (EU).
Trade disputes between economies from both sides of the Atlantic have eased as US President Donald Trump has postponed 50% flat tariffs on the EU to July 9. Trump proposed a 50% duty on imports from the old continent on Friday, which was scheduled to come into action on June 1. Both economies have agreed to advance trade discussions after the EU urged Washington for some time to reach a good deal.
European Commission President Ursula Von der Leyen said in a post on X on Sunday that she had a "good" phone call with Trump and that the EU was ready to “advance talks swiftly and decisively." "To reach a good deal, we would need the time until July 9," she added.
Meanwhile, better-than-projected revised German Q1 Gross Domestic Product (GDP) data has also supported the Euro. According to the revised estimates, the German economy expanded by 0.4% in the first quarter of the year, stronger than preliminary expectations and the prior release of 0.2%.
On the Tokyo front, the JPY is underperforming across the board despite a hotter-than-projected Japan’s National Consumer Price Index (CPI) report for April, which potentially increases the odds of an interest rate hike by the Bank of Japan (BoJ) in the July meeting.
Japanese Yen PRICE Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.10% | -0.23% | 0.30% | -0.10% | -0.25% | -0.41% | 0.16% | |
| EUR | 0.10% | -0.12% | 0.46% | 0.04% | -0.15% | -0.31% | 0.27% | |
| GBP | 0.23% | 0.12% | 0.23% | 0.13% | -0.03% | -0.17% | 0.41% | |
| JPY | -0.30% | -0.46% | -0.23% | -0.40% | -0.57% | -0.78% | -0.15% | |
| CAD | 0.10% | -0.04% | -0.13% | 0.40% | -0.14% | -0.30% | 0.29% | |
| AUD | 0.25% | 0.15% | 0.03% | 0.57% | 0.14% | -0.19% | 0.46% | |
| NZD | 0.41% | 0.31% | 0.17% | 0.78% | 0.30% | 0.19% | 0.60% | |
| CHF | -0.16% | -0.27% | -0.41% | 0.15% | -0.29% | -0.46% | -0.60% |
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).
On Friday, Japan’s National CPI excluding Fresh Food rose at a faster pace of 3.6%, compared to estimates of 3.4% and the March reading of 3.2%.
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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