EUR/JPY steadies above 187.00 following German ZEW Survey data

EUR/JPY moves little following the release of German ZEW Survey figures.
Germany’s ZEW Economic Sentiment plunged to -17.2 in April, far below forecasts and down from March’s -0.5.
Nikkei reported that the BoJ is expected to leave interest rates unchanged in April.

Akhtar Faruqui FXStreet

EUR/JPY remains steady after modest gains registered in the previous day, trading around 187.20 during the Asian hours on Monday. The currency cross holds ground as the Euro (EUR) moves little following the release of German ZEW Survey data.

German ZEW Survey - Economic Sentiment plunged to -17.2 in April, far below the -5 forecast and down from -0.5 in March. The Current Situation index also deteriorated sharply to -73.7, missing estimates of -70.0 and declining from -62.9 previously. Meanwhile, the Eurozone ZEW Economic Sentiment index also weakened markedly, falling to -20.4 versus expectations of -3.6.

European Central Bank (ECB) Vice President Luis de Guindos said during the European trading session on Tuesday that the central bank views private credit as a key source of risk to financial stability, alongside elevated market valuations and loose fiscal policy in some countries, according to Reuters.

The EUR/JPY cross may continue to appreciate as the Japanese Yen (JPY) could remain under pressure amid increasing uncertainty over the Bank of Japan (BoJ) policy outlook. The BoJ is expected to revise inflation forecasts higher while lowering growth projections, reflecting rising energy costs and broader headwinds stemming from the Iran conflict.

According to a report from Nikkei, the BoJ is expected to leave interest rates unchanged at 0.75% in the monetary policy announcement on April 28. Other reports also suggest that the central bank is assessing the economic impact of the Middle East conflict, although it may signal a resumption of policy normalization as early as June.

Economic Indicator

ZEW Survey – Economic Sentiment

The Economic Sentiment published by the Zentrum für Europäische Wirtschaftsforschung measures the institutional investor sentiment, reflecting the difference between the share of investors that are optimistic and the share of analysts that are pessimistic. Generally speaking, an optimistic view is considered as positive (or bullish) for the EUR, whereas a pessimistic view is considered as negative (or bearish).

EUR/USD remains sidelined around 1.1600

EUR/USD clings to its decent gains on Monday and continues to move in a consolidative mood around the 1.1600 region. Improved risk appetite following the US-Iran agreement to reopen the Strait of Hormuz continues to weigh on the US Dollar, lending support to the risk complex. Looking ahead, investors are likely to remain on the sidelines ahead of Wednesday's FOMC meeting.

GBP/USD retreats from tops, back to 1.3420

GBP/USD keeps its advance past the 1.3400 yardstick at the beginning of the week. In the meantime, Cable continues to draw support from improved market sentiment following reports that the US and Iran have reached a framework agreement aimed at ending the conflict and reopening the Strait of Hormuz.

Gold stays firm, still below $4,400

Gold builds on its recent gains on Monday, climbing well north of the $4,300 mark per troy ounce. The yellow metal benefits from renewed selling pressure on the Greenback as investors reassess the implications of the US-Iran agreement to end hostilities and reopen the Strait of Hormuz. Market participants now turn their attention to Wednesday's FOMC gathering.