EUR/JPY refreshes decade high above 162.00 amid delay in Japan’s intervention plans
|- EUR/JPY prints a fresh decade high near 162.30 ahead of Eurozone Q3 GDP data.
- The Eurozone Q3 GDP is seen contracting by 0.1%.
- A delay in Japan’s intervention plans has weakened the Japanese Yen.
The EUR/JPY pair printed a fresh decade high to near 162.30 on Tuesday. The cross rallies further on the narrative that the European Central Bank (ECB) will keep interest rates higher for a longer period to bring down inflation to 2%.
Inflation in the Eurozone economy has softened to 2.9% but for stability near 2% a tight interest rate policy for a longer period is highly required. ECB President Christine Lagarde commented on Friday that higher interest rates for a long period would contribute to returning inflation to 2%.
Meanwhile, investors await the preliminary Gross Domestic Product (GDP) for Q3, which will be published at 10:00 GMT. According to the estimates, the Eurozone economy contracted by 0.1% as firms cut heavily on inventories and laborforce due to weak demand from domestic and overseas markets.
The Japanese Yen weakens as investors expect that the process of an exit from the ultra-loose monetary policy by the Bank of Japan (BoJ) would be very slow. Last week, BoJ Governor Kazuo Ueda warned about the potential risks of exiting from decade-long easy policy on financial institutions and borrowers.
Amid a sharp sell-off in the Japanese Yen, the expectations of a stealth intervention by the Japanese authority in the FX domain have escalated. Japanese Finance Minister Sunichi Suzuki said on Monday that it’s important for currencies to move in a stable manner reflecting fundamentals.
In spite of a stealth intervention, the broader appeal for the Japanese Yen would be bearish as the downside is backed by expansionary monetary policy.
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