Anna 
During the European trading session on Thursday, the EUR/JPY pair managed to stage a recovery, reclaiming most of its intraday losses and hovering just below the session’s opening price of 158.71. The currency cross experienced this resurgence as it sought support in anticipation of the European Central Bank’s upcoming interest rate decision.
The euro zone has recently witnessed inflation rates that surpass the European Central Bank’s targeted levels, raising concerns about the possibility of a slowdown or even stagflation within the euro zone. Consequently, expectations are that the European Central Bank will refrain from further tightening its monetary policy, thereby exerting downward pressure on the euro.
European Central Bank President Christine Lagarde, in her remarks on Wednesday, emphasized that underlying inflation continues to exhibit strength, and wage growth remains at historically high levels. These factors are expected to be pivotal in shaping the narrative that influences the euro’s performance in the near future.
Market participants are now shifting their focus to the release of the Tokyo Consumer Price Index (CPI) and core CPI for October, scheduled for Friday. The data will provide insights into Japan’s inflation situation and its potential impact on market sentiment.
Meanwhile, the Japanese yen saw an improvement against the U.S. dollar during the European session. However, the extent and rapidity of this uptick raised questions, prompting speculation about the possibility of Japanese intervention in the currency markets.
Earlier in the day, Japanese Deputy Chief Cabinet Secretary Murai Hideki voiced his concerns via Reuters, highlighting the importance of maintaining stable currency trends aligned with economic fundamentals. While refraining from explicit commentary on currency intervention, Hideki expressed dissatisfaction with excessive foreign exchange volatility and affirmed the commitment to take appropriate measures when addressing foreign exchange matters. This statement added an element of uncertainty to the currency markets, as traders monitored the potential for Japanese intervention.
