EUR/JPY holds gains near 164.00 as safe-haven demand for the Japanese Yen weakens

EUR/JPY has recovered its recent losses registered in the previous session, trading around 164.00 during the Asian hours on Thursday. The currency cross receives support as the Japanese Yen (JPY) loses ground due to dampened safe-haven demand after a US federal court’s blocking President Donald Trump from imposing "Liberation Day" tariffs from taking effect.

A three-judge panel at the Court of International Trade in Manhattan ruled that Trump lacked the authority and declared the executive orders issued on 2 April unlawful. The Trump administration put higher duties on imports from countries with large trade surpluses, such as China and the European Union, by introducing a 10% baseline tariff on most goods entering the US. Trump appears unlikely to back down, posting on his social media app Truth Social that he is on a "Mission from God".

The Bank of Japan (BoJ) Governor Kazuo Ueda stressed the need to monitor potential spillover effects on shorter-maturity debt markets following rising super-long-term bond yields. Ueda reflected growing caution about financial stability risks amid shifting interest rate dynamics in Japan. Ueda has said earlier that the BoJ is ready to adjust monetary policy as needed to meet its inflation targets.

However, the EUR/JPY cross also appreciated as the Euro (EUR) draws support from easing trade tension between the United States and the European Union (EU). Last week, President Trump extended the tariff deadline on imports from the EU from June 1 to July 9. Meanwhile, the Brussels also agreed to accelerate trade talks with the United States to avoid a transatlantic trade war.

European Central Bank (ECB) Governing Council member and head of the Dutch central bank De Nederlandsche Bank (DNB), Klaas Knot, said on Wednesday that the current European inflation outlook is murky, challenging the central bank to engage in direct moves. On Tuesday, ECB policymaker and French central bank chief François Villeroy de Galhau noted that the 0.6% inflation rate in France is a “very encouraging sign of disinflation in action” and stated that the “policy normalization in the Euro area is probably not complete”.