Anna 
The Euro concluded the week with positive performances against both the Japanese Yen (JPY) and the US Dollar (USD). The movements in EUR/USD and EUR/JPY were significantly influenced by data releases from the US and Japan.
In the US, the week saw the revision of the Q3 GDP Growth number downward, followed by the release of the Fed’s preferred inflation gauge, the Personal Consumption Expenditure (PCE) data on Friday. The softer economic data contributed to a weakening US Dollar, with market participants increasing their expectations of a rate cut. As of now, there is an 88% chance priced in by market participants for a rate cut in March 2024.
EUR/JPY experienced a recovery during the week, reversing the recent strength of the Japanese Yen. The strength in the Yen diminished following the Bank of Japan (BoJ) meeting, where speculations about a potential policy pivot were quashed. Additionally, ECB Policymaker Schnabel noted that a short-term rise in inflation is expected, and there is still progress to be made in achieving inflation targets.
Looking ahead to the upcoming week, market participants anticipate a quiet period with thin liquidity and a lack of high-impact data. The ongoing geopolitical tensions add an element of uncertainty. The expected quiet trading week might result in range-bound movements, and the BoJ’s summary of Opinions could provide insights into the stance of the central bank, potentially influencing the Japanese Yen in the first week of 2024.
