Euro rebounds strongly against Yen after German, Eurozone Q2 GDP data

The Euro bounces back against the Japanese Yen after the flash German and Eurozone Q2 data release.
Eurozone GDP turns positive in Q2, growing strongly by 0.4%.
Traders are confident that the BoJ will leave interest rates unchanged on Friday.

Sagar Dua FXStreet

The Euro (EUR) claws back its early losses and turns almost flat against the Japanese Yen (JPY) after the release of preliminary German Q2 Gross Domestic Product (GDP) and inflation data for its six states.

In the European session on Thursday, EUR/JPY turns flat at around 187.35.

The data shows that the economy expanded 0.2% Quarter-on-Quarter (QoQ) against 0.1% estimates. In the first quarter of the year, the GDP growth was 0.3%. On an annualized basis, the GDP growth remained stronger at 0.9% vs. 0.6% estimates and the prior release of 0.4%.

Meanwhile, the inflation data in all six states of Germany remained stronger in July, staging a strong ground for the flash German Harmonized Index of Consumer Prices (HICP) data, which will be published at 12:00 GMT.

Eurozone Q2 GDP data seems stronger than that of Germany. Old Continent's GDP returns to growth after declining 0.2% in the first quarter of the year. The GDP growth remained stronger at 0.4% vs. estimates of 0.2%

Signs of inflationary pressures accelerating in Germany will likely boost expectations of more interest rate hikes by the European Central Bank (ECB) this year.

On the JPY front, investors await the Tokyo Consumer Price Index (CPI) data for July and the Bank of Japan's (BoJ) monetary policy announcement on Friday. Tokyo CPI ex. Fresh Food is expected to arrive higher at 1.7% Year-on-Year (YoY) from 1.6% in June.

BoJ decision seen as a foregone conclusion, with focus shifting to policy outlook

Analysts at Commerzbank expect the Bank of Japan to deliver no surprises on the policy rate at its meeting early Friday, noting that the central bank "will leave its overnight call rate unchanged." They highlight that this outcome is already fully discounted, with "the market...pricing this in at 99.3%, and all analysts surveyed by Bloomberg agree." As a result, Commerzbank stresses that "that won’t be the deciding factor," arguing instead that "the outlook will be much more important" for markets as investors scrutinize the BoJ’s guidance for any shift in tone or timing on future moves.

Economic Indicator

BoJ Interest Rate Decision

The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.

GBP/USD recovers ground above 1.3350 ahead of BoE decision

GBP/USD holds the bounce above 1.3350 in the European session on Thursday. The pair's upside remains capped amid a modest US Dollar recovery. Traders turn cautious and refrain from placing fresh bets ahead of the BoE policy announcements and the US GDP release.

EUR/USD holds losses around 1.1450 despite upbeat German, EU GDP data

EUR/USD stays on the back foot around 1.1450 in the European session on Thursday as the better-than-expected German and Eurozone GDP data fails to support the Euro. The US Dollar recovers ground on renewed Mideast hostilities and the hawkish Fed message. Traders now brace for preliminary readings of the second-quarter GDP from the US.

Gold bears retain control ahead of US Q2 GDP

Gold maintains its offered tone through the first half of the European session on Thursday and seems vulnerable to following an intraday rejection near the $4,100 mark. Following Wednesday's post-FOMC downfall to a one-week low, the US Dollar (USD) regains positive traction amid escalating US-Iran tensions, weighing on the bullion ahead of the US Q2 GDP release.

Mixed signals leave XRP and XLM at crossroads

Ripple and Stellar are trading at critical technical levels on Thursday. XRP has stabilized above the psychological $1.00 support, while XLM is testing support at $0.173. Traders should be cautious as mixed derivatives metrics keep the outlook uncertain for both altcoins. Derivatives data shows mixed sentiment among traders. CoinGlass’ long-to-short ratio for XRP reads 1.02 on Thursday.

US GDP expected to grow at 2.1% in Q2, unshaken by Iran conflict

The United States (US) Bureau of Economic Analysis (BEA) is set to publish its preliminary estimate of second-quarter Gross Domestic Product (GDP) on Thursday, with analysts expecting the data to show annualised growth at a solid 2.1%, a modest cooling from the 2.1% expansion recorded in the previous quarter.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.