EUR/JPY drops to near 182.40 as US trade policy uncertainty boosts Yen’s appeal
- EUR/JPY falls to near 182.40 as investors shift to safe-haven fleet after US SC ruled against Trump’s tariff policy.
- US President Trump announces 15% global tariffs after SC called trade deals ‘invalid’, being based from invoking IEEPA.
- The EU aims to freeze the final approval of trade deal with the US until receiving details on new US tariff policy terms.
The EUR/JPY pair trades 0.15% down to near 182.40 during the Asian trading session on Monday. The cross has come under pressure as the safe-haven appeal of the Japanese Yen (JPY) has improved in a holiday mood in Japan amid uncertainty over the United States (US) trade policy.
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 | -0.27% | -0.16% | -0.40% | -0.08% | 0.21% | -0.06% | -0.36% | |
| EUR | 0.27% | 0.11% | -0.16% | 0.20% | 0.48% | 0.21% | -0.10% | |
| GBP | 0.16% | -0.11% | -0.25% | 0.08% | 0.37% | 0.10% | -0.21% | |
| JPY | 0.40% | 0.16% | 0.25% | 0.35% | 0.63% | 0.37% | 0.07% | |
| CAD | 0.08% | -0.20% | -0.08% | -0.35% | 0.29% | 0.02% | -0.28% | |
| AUD | -0.21% | -0.48% | -0.37% | -0.63% | -0.29% | -0.26% | -0.57% | |
| NZD | 0.06% | -0.21% | -0.10% | -0.37% | -0.02% | 0.26% | -0.31% | |
| CHF | 0.36% | 0.10% | 0.21% | -0.07% | 0.28% | 0.57% | 0.31% |
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).
Japan’s markets are closed on Monday due to The Emperor’s Birthday.
The US trade policy has become unpredictable, following Supreme Court’s verdict against tariffs invoked by President Donald Trump under the International Emergency Economic Powers Act (IEEPA).
Meanwhile, US President Trump condemned SC’s ruling against his tariff policy and announced a 15% increase in import duty globally to offset the same.
However, the broader outlook of the JPY remains uncertain as soft National Consumer Price Index (CPI) data for January has raised concerns over speculation for an interest rate hike by the Bank of Japan (BoJ) in the near term. The data showed on Friday that the National headline CPI grew at a moderate pace of 1.5% Year-on-Year (YoY) against 2.1% in December. National CPI ex. Fresh Food came in lower at 2%, as expected, from the previous reading of 2.4%.
On the Euro (EUR) front, European Parliament’s trade chief stated that the European Union (EU) will propose freezing the ratification process of the trade deal with the US until they receive details from Trump’s administration on its trade policy, according to Bloomberg.
On the domestic front, upbeat preliminary HCOB Purchasing Managers’ index (PMI) data for February has improved its broader outlook. The HCOB reported on Friday that the Composite PMI expanded at a faster pace to 51.9 against estimates of 51.5 and the former release of 51.3.
Euro FAQs
The Euro is the currency for the 20 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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