The EUR/JPY pair has bounced back above 168.00 as concerns over potential ECB rate cuts in June have resurfaced. Eurozone inflation exceeded expectations, with the annual Harmonized Index of Consumer Prices (HICP) rising by 2.4%. Additionally, Q1 GDP surpassed estimates, growing by 0.3%.
This strong economic performance has raised doubts about the ECB’s plans to maintain a restrictive monetary policy. Speculation is mounting that the ECB may announce rate cuts at the upcoming June meeting, as price pressures continue to decline. While most ECB policymakers are leaning towards a rate cut in June, there is uncertainty about whether the rate cut cycle will continue beyond this meeting.
On the other hand, the Japanese Yen has weakened slightly against major currencies after a rally on Monday. Market participants initially attributed the Yen’s strength to potential intervention by Japan, but this was not confirmed by Japan’s top currency diplomat. He expressed concerns about speculative and abnormal FX movements impacting the economy, but did not disclose any specific intervention plans.
Overall, the EUR/JPY pair is showing resilience amid economic uncertainties in both the Eurozone and Japan. Investors will be closely monitoring any developments regarding ECB rate cuts and Japanese intervention strategies in the coming days.