The EUR/JPY pair is down by over a third of a percent in the 167s on Friday, as concerns about the outcome of the upcoming French legislative elections weigh on the Euro while the Japanese Yen gains support from the Bank of Japan’s plan to end quantitative easing.
The Euro is facing pressure due to uncertainty surrounding the French legislative elections scheduled for June 30 and July 7. French President Emmanuelle Macron called for these snap elections after his centrist Renaissance party was defeated by the far-right National Rally (RN) party in the European parliamentary elections. With RN polling over 30% and Renaissance around 19%, there is a risk of the far-right party winning power, which could have significant consequences for Europe.
On the other hand, the Yen received a boost after the Bank of Japan meeting on Friday. While the bank did not raise policy rates, BoJ Governor Kazuo Ueda mentioned a plan to reduce Japanese Government Bond purchases over the next one to two years, which will be detailed in the upcoming July meeting. This move indicates a potential end to the BoJ’s quantitative easing program, which could impact the currency.
Additionally, European Central Bank (ECB) officials have hinted at the possibility of further easing after the interest-rate cut scheduled for June 19. Comments from ECB officials suggest that more rate cuts may be possible if disinflation continues, with some officials indicating a potential follow-up to the June cut with further easing measures.
Overall, the EUR/JPY pair is influenced by political tensions in France, the BoJ’s plans to end quantitative easing, and potential monetary policy changes by the ECB. Investors are closely monitoring these developments for their impact on the currency pair’s movement.