In early Asian trading on Tuesday, the EUR/JPY continues to decline, currently hovering around 177.20. As more people speculate that the Bank of Japan may soon raise interest rates, the Yen is strengthening. Following Governor Kazuo Ueda’s recent remarks, the market is beginning to consider December or January as viable options for a move.
However, the exact moment the BoJ (Bank of Japan) will decide whether to raise interest rates is unknown. Japan’s new Prime Minister, Sanae Takaichi, looks set to push for heavy fiscal stimulus, and that might keep the central bank on hold a bit longer. Finance Minister Satsuki Katayama also stepped in to say her old view of the Yen’s fair value (that 120–130 per dollar range) doesn’t matter anymore. Now, she just wants to keep things steady.
On the other side, the Euro’s getting a bit of support. People expect the European Central Bank to leave rates unchanged for the rest of the year. The ECB held steady for the third meeting in a row last month, hinting that inflation’s under control and the economy’s holding up okay.
Fresh Eurozone numbers show inflation cooling off, getting closer to the ECB’s 2% target. GDP and business sentiment are ticking up too, though just a little. ECB officials like Francois Villeroy de Galhau and Martins Kazaks keep saying the bank feels comfortable for now, but they’ll watch the data and won’t promise anything in advance.
So, while speculation around the BoJ is helping the Yen, the Euro’s steady footing could keep the EUR/JPY pair from dropping too much further—at least for now.
