The EUR/JPY pair nudged a bit higher in Asian trading on Tuesday, staying right around 183.50 after slipping for two days. The euro’s getting a little help from steadier market nerves—tensions between the US and Venezuela cooled off, and that’s taken some pressure off riskier currencies like the euro. Traders feel more relaxed now, but they’re still careful. That’s helped the euro steady up against the yen.
Now, everyone’s watching Europe’s upcoming economic numbers. In the day ahead, attention will turn on Germany and the release of its latest inflation data for December, which includes the CPI and HICP. These figures are important. They contribute to setting the tone for potential future interest rate actions by the European Central Bank.
All eyes on German inflation
As stated, the focus will be on Germany, as it is the dominant force in the Eurozone. Most people believe interest rates won’t drop anytime soon and will rise if inflation continues to decline. The ECB left rates unchanged in December 2025 and gave no hints about rushing into anything new. President Christine Lagarde basically said things are too uncertain to make any promises about what comes next.
Along with inflation data, traders are keeping tabs on PMI reports from Germany and the Eurozone. These business activity numbers give an early read on the economy and how much demand is out there.
Yen could get a boost if BoJ hikes rates
Even with the euro holding steady for now, EUR/JPY might not run much higher. The yen could start pushing back if more people bet on the Bank of Japan raising rates this year. BoJ Governor Kazuo Ueda said future moves depend on how Japan’s economy and inflation play out, but he sounded pretty upbeat—he thinks Japan will keep seeing steady wage and price growth.
If investors get more sure about the BoJ tightening, expect more demand for the yen. That could keep EUR/JPY stuck in a narrow range, with traders weighing what’s happening in Europe against whatever the BoJ does next.
