EUR/JPY ticks down to near 163.00, Russia-Ukraine truce talks in focus
- EUR/JPY edges lower to near 163.00 as the Japanese Yen performs strongly on firm BoJ hawkish bets.
- Japan’s Akazawa to visit the US later this week for trade talks with Washington.
- ECB’s Centeno sees interest rates falling below 2% to offset downside risks to inflation.
The EUR/JPY pair edges down to near 162.90 during North American trading hours on Wednesday. The cross ticks lower as the Japanese Yen (JPY) outperforms across the board, with investors remaining increasingly confident that the Bank of Japan (BoJ) will raise interest rates again this year.
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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.44% | -0.30% | -0.50% | -0.34% | -0.34% | -0.34% | -0.38% | |
| EUR | 0.44% | 0.12% | -0.10% | 0.07% | 0.12% | 0.10% | 0.05% | |
| GBP | 0.30% | -0.12% | -0.21% | -0.04% | -0.00% | -0.03% | -0.10% | |
| JPY | 0.50% | 0.10% | 0.21% | 0.15% | 0.17% | 0.15% | 0.12% | |
| CAD | 0.34% | -0.07% | 0.04% | -0.15% | 0.00% | 0.02% | -0.06% | |
| AUD | 0.34% | -0.12% | 0.00% | -0.17% | 0.00% | -0.01% | -0.08% | |
| NZD | 0.34% | -0.10% | 0.03% | -0.15% | -0.02% | 0.00% | -0.06% | |
| CHF | 0.38% | -0.05% | 0.10% | -0.12% | 0.06% | 0.08% | 0.06% |
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).
Earlier this week, BoJ Deputy Governor Shinichi Uchida expressed confidence that inflation in Japan will likely re-accelerate after a period of slowdown, a scenario that will keep hopes of interest rate hikes alive.
Inflation in Japan is expected to cool down for a period amid uncertainty over the global economic outlook due to the fallout of tariffs by United States (US) President Donald Trump.
This week, the major trigger for the Japanese Yen (JPY) will be US-Japan trade talks on the weekend. Japan’s Kyodo News agency reported on Tuesday that top trade negotiator Ryosei Akazawa will visit Washington for trade discussions later this week. The agency also reported on Tuesday that Japan to consider accepting lower US tariff rates, and not demanding exemption.
Though investors have underpinned the JPY against the Euro (EUR), the major currency is outperforming its other peers ahead of ceasefire talks to end war in Ukraine. US President Trump stated through a post on Truth.Social that both Russia and Ukraine have agreed for truce talks in the Vatican City. Signs of a ceasefire between Russia and Ukraine would be favorable for the Euro.
On the monetary policy front, European Central Bank (ECB) officials continue to argue in favor of lowering interest rates further to offset downside inflation risks. "The ECB may need to cut its key interest rate below the neutral level of 1.5%-2% to prevent inflation from falling below its 2% target," ECB Governing Council member and Governor of the Bank of Portugal Mario Centeno said in a briefing during European trading hours.
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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