EUR/JPY: No response to stagnant Tokyo inflation
- EUR/JPY is barely moving in response to Japanese inflation data.
- Tokyo core CPI rose less than estimates and stayed well below BOJ’s target.
- BOJ is expected to cut rates in the near future.
- Risk-on in stocks could bode well for EUR/JPY.
The EUR/JPY pair is currently trading in a sideways manner around 120.95, having jumped by 0.44% on Monday.
The Japanese Yen is showing resilience to weaker-than-expected domestic data. Core consumer prices in Tokyo, a leading indicator of nationwide inflation, rose 0.5% in October from a year earlier, the data released a few minutes before press time showed.
The rise in inflation was slower than a median market estimate for a 0.7 percent gain.
The Japanese inflation remains miles away from the Bank of Japan’s (BOJ) 2% inflation target, even though the central bank has been running ultra-easy monetary policy for more than six years.
The BOJ is widely expected to stand pat this week, although an increasing number of economists expect the central bank to cut rates further into negative territory in the near term.
The JPY, therefore, could come under pressure during the day ahead – more so, as the US stocks hit record highs on Monday and could put a bid under the Asian and European equities.
As of writing, the futures on the S&P 500 are reporting marginal gains.
Also, continued hopes that a partial US-China trade deal would be negotiated soon could bode well for the EUR/JPY cross. Note that President Donald Trump tweeted Monday progress was being made in trade talks with China.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
