- EUR/JPY tumbles to near 161.00 as the Euro declines after Trump threatens to impose 50% tariffs on imports from the EU.
- The ECB is certain to lower interest rates in the June meeting.
- Hot Japan National CPI data for April increases BoJ hawkish bets.
The EUR/JPY pair slides to near 161.00 during North American trading hours on Friday, the lowest level seen in a month. The pair slumps as the Euro (EUR) weakens after United States (US) President Donald Trump threatens to impose 50% tariffs on imports from the European Union (EU) in a post on Truth.Social during late European trading hours after Brussels sent a not-so-good trade proposal to Washington.
"Our discussions with them are going nowhere! Therefore, I am recommending a straight 50% tariff on the European Union, starting on June 1, 2025. There is no tariff if the product is built or manufactured in the United States. Thank you for your attention to this matter!", Trump said.
A fresh escalation in trade tensions between the economies has led to a sharp decline in the demand for the Euro (EUR). The impact of US-EU trade issues would be significant on the major currency as goods exported by the EU in 2024 were almost double from what it imported from the US, according to the Office of the US Trade Representative.
Meanwhile, US Treasury Secretary Scott Bessent has also warned in an interview with Fox News that the EU is “not negotiating in good faith”.
Additionally, higher hopes that the European Central Bank (ECB) will reduce interest rates in the June policy meeting have also weighed on the Euro.
On the Tokyo front, the Japanese Yen (JPY) outperforms a majority of its peers, except antipodeans, on hotter-than-projected Japan’s National Consumer Price Index (CPI) data for April, released earlier in the day. As measured by the CPI, the inflation data, excluding Fresh Food, rose at a faster pace of 3.6%, compared to estimates of 3.4% and the March reading of 3.2%.
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 | -0.46% | -0.51% | -0.90% | -0.62% | -0.90% | -1.18% | -0.83% | |
| EUR | 0.46% | -0.05% | -0.42% | -0.16% | -0.44% | -0.72% | -0.36% | |
| GBP | 0.51% | 0.05% | -0.38% | -0.11% | -0.36% | -0.67% | -0.31% | |
| JPY | 0.90% | 0.42% | 0.38% | 0.28% | -0.03% | -0.30% | 0.06% | |
| CAD | 0.62% | 0.16% | 0.11% | -0.28% | -0.31% | -0.56% | -0.20% | |
| AUD | 0.90% | 0.44% | 0.36% | 0.03% | 0.31% | -0.27% | 0.08% | |
| NZD | 1.18% | 0.72% | 0.67% | 0.30% | 0.56% | 0.27% | 0.35% | |
| CHF | 0.83% | 0.36% | 0.31% | -0.06% | 0.20% | -0.08% | -0.35% |
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).
Hot Japan CPI data has increased confidence among market experts that the Bank of Japan (BoJ) could hike interest rates in the July meeting.
Analysts at ING said in a note, “Hotter-than-expected Japanese consumer inflation, especially the core inflation hitting an over two-year high, should increase the odds of a BoJ rate hike in July.”
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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