EUR/JPY rises near 180.70 as traders snap up the pair after three straight days of losses. Buyers stepped in once the price bounced off the 180.00 level, and now everyone’s watching for the latest Eurozone inflation numbers (HICP) to set the tone.
The Expectation is that the ECB Will Keep Rates Steady
Right now, the Euro’s got some support. People expect the ECB to keep rates steady for a while, especially with the flash HICP release just around the corner. Forecasts put headline inflation at 2.1% year-on-year for November and core inflation at 2.5%. Recent numbers out of France, Spain, and Italy didn’t show much price pressure, but Germany’s data came in a bit hotter than expected. All this mixed data adds up to one thing: the ECB probably won’t cut rates anytime soon. That’s giving the Euro some momentum and keeping EUR/JPY on firmer ground.
JPY Weakens as Risk Sentiment Improves, but Upside Remains Capped
On the flip side, the Japanese Yen is having a softer run. As global risk appetite picks up, investors aren’t flocking to safe-haven currencies like the Yen. Even so, there’s a ceiling on how much the Yen can drop. Most people think the Bank of Japan will keep slowly moving toward normal policy.
BoJ Governor Kazuo Ueda’s recent comments—he sounds more confident about hitting the bank’s economic and inflation goals—have helped keep the Yen from sliding further. Japan’s Finance Minister Satsuki Katayama also jumped in, voicing worries about wild moves in the currency markets, and that’s stirred some talk about possible intervention to steady the Yen.
So, while the Euro looks steady and the Yen isn’t falling off a cliff, EUR/JPY probably won’t break out in a big way unless the Eurozone inflation numbers really surprise to the upside. For now, the pair hangs in there, waiting for the next big cue.
