EUR/JPY keeps dropping, now hanging out around 179.40 after that record run up to 179.97. Traders are switching things up. Suddenly, the Yen got some confidence. Japan’s new GDP numbers weren’t fantastic, but honestly, they weren’t the disaster everyone was ready for. That tiny surprise was enough to get people interested in the Yen again, and now the Euro’s feeling the pressure.
Japan’s Economy Isn’t Great—Just Not Terrible
Japan’s GDP fell 0.4% in the previous quarter. It is still a step backward, but not as much as the 0.6% fall that everyone had anticipated. Annual figures show a 1.8% decrease, which is again better than the 2.5% decline that most had anticipated. Growth has obviously slowed since the previous quarter, but people seem almost relieved. It could have been worse.
Now, don’t get too excited for the Yen. Prime Minister Sanae Takaichi keeps pressing the Bank of Japan to stick with low rates. She’s all about growth and steady inflation. Over at the BOJ, Governor Kazuo Ueda sounds a bit more hopeful. He points to healthy consumer spending, rising incomes, and a tight job market. Inflation’s crawling toward that 2% target, so a rate hike is still possible.
The Euro’s Not Folding and Staying Firm
Even with the Yen making a comeback, the Euro’s holding its ground. Traders think the European Central Bank will just keep rates where they are—no surprises—since inflation’s right on the mark and the economy’s holding steady.
Bloomberg caught some cautious comments from the ECB’s Olli Rehn. He admits there’s a risk inflation slows more than they’d like, but he also sees stable growth in the eurozone, tariffs and all. So yeah, the outlook’s a bit murky, but this steady approach could help EUR/JPY find its footing again soon.
