- EUR/JPY rebounds from the intraday low of 161.20 and recovers its entire intraday losses.
- BoJ Ueda leaned towards more interest rate hikes this year, given that price pressures remain steady.
- The ECB is expected to deliver two more interest rate cuts this year.
The EUR/JPY recovers its entire intraday losses and moves to near 162.50 in Friday’s European session. The cross fell earlier after hawkish guidance from Bank of Japan (BoJ) Governor Kazuo Ueda strengthened the Japanese Yen (JPY).
Kazuo Ueda said during a parliamentary hearing that short-term interest rates would need to be raised again if inflationary pressures remain steady. Market participants are also anticipating that the BoJ will tighten its monetary policy further, given the strong Japan’s economic outlook and price pressures well above the bank’s target of 2%.
Meanwhile, Japan’s National Consumer Price Index (CPI), excluding fresh food, grew expectedly in July. The data released in Friday’s Asian session showed that the underlying inflation rose by 2.7%, as expected, from 2.6% in June.
On the Eurozone front, growing speculation of more interest rate cuts by the European Central Bank (ECB) this year could weigh on the Euro (EUR). The ECB is widely anticipated to resume its policy-easing cycle again in September and deliver one more interest rate cut in the last quarter of this year. Market expectations for ECB rate cuts have been prompted by the Eurozone’s uncertain economic outlook and slowing wage pressures.
Flash Eurozone HCOB PMI report for August showed that the overall economic activity rose due to the Olympic Games in Paris, which is a one-time event and not a structural change. The report also indicated a sharp contraction in the German economy amid vulnerable overseas demand.
Meanwhile, soft Eurozone Q2 Negotiated Wage Rates have eased fears of inflation remaining persistent. The wage growth measure rose by 3.55%, slower than 4.74% came in the first quarter of this year.
Economic Indicator
National CPI ex Fresh Food (YoY)
Japan’s National Consumer Price Index (CPI), released by the Statistics Bureau of Japan on a monthly basis, measures the price fluctuation of goods and services purchased by households nationwide excluding fresh food, whose prices often fluctuate depending on the weather. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Japanese Yen (JPY), while a low reading is seen as bearish.
Read more.Last release: Thu Aug 22, 2024 23:30
Frequency: Monthly
Actual: 2.7%
Consensus: 2.7%
Previous: 2.6%
Source: Statistics Bureau of Japan
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD remains offered in the low-1.0900s
The generalised selling pressure continues to weigh on the risk complex, pushing EUR/USD back toward the 1.0900 support level amid a growing risk-off mood, as traders assess President Trump’s reciprocal tariffs and their impact on economic activity.
GBP/USD retreats further and breaks below 1.2800
The US Dollar is picking up extra pace and flirting with daily highs, sending GBP/USD to multi-week lows near 1.2770 in a context where safe-haven demand continues to dictate sentiment amid the chaos of US tariffs.
Gold recedes to four-week lows near $2,950
The persistent selling pressure is now dragging Gold prices to the area of fresh multi-week troughs near the $2,950 mark per troy ounce, always amid the continuation of the recovery in the US Dollar, highr US yields across the curve and unabated tariff tensions.
US stock market suddenly reverses higher after rumor of 90-day tariff pause before sinking again Premium
NASDAQ sinks 4% before shooting higher on tariff pause rumor. CNBC says White House unaware of tariff pause rumor. S&P 500 sinks to January 2024 level. Bank of America cuts its year-end target for S&P 500 by 16%.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.