Anna 
During the early European hours, the EUR/JPY pair continued its upward trajectory for the second consecutive session, hovering around 163.30. Despite a slight uptick in the Japanese Yen (JPY) observed yesterday, it struggles to sustain its momentum as investors remain wary of potential interventions by Japanese authorities aimed at preventing a significant decline in the Yen’s value.
The Japanese Finance Minister, Shunichi Suzuki, emphasized the importance of curbing excessive exchange-rate volatility and reiterated the authorities’ preparedness to take appropriate measures if necessary, lending some support to the safe-haven JPY. However, a subdued risk sentiment prevails in the market, further buoying the Yen.
Meanwhile, the Bank of Japan’s (BoJ) cautious stance on further policy tightening fails to ignite bullish sentiment or provide substantial momentum for the Japanese currency. Investors await clearer signals from the central bank regarding its monetary policy direction.
In contrast, European Central Bank (ECB) policymaker Robert Holzmann hinted at the possibility of a rate cut in June, albeit with a caveat that he prefers to see more supportive data before making a decision. This statement underscores the ECB’s concerns over the economic outlook and suggests potential accommodative measures in the future.
Adding to the cautious tone, German inflation figures for March came in slightly below expectations, with the preliminary German Harmonized Index of Consumer Prices (HICP) rising by 0.6% month-on-month (MoM) and 2.3% year-on-year (YoY). This moderation in inflation brings Germany closer to the ECB’s target of 2%, fueling speculation of a looming interest rate cut. Consequently, the Euro (EUR) faces selling pressure, presenting a challenge for the EUR/JPY cross.
Looking ahead, investors are eagerly awaiting the release of the advanced Eurozone Harmonized Index of Consumer Prices data for March, scheduled for Wednesday. This data release is expected to provide further insights into the inflationary pressures within the Eurozone and could potentially influence the direction of the EUR/JPY pair in the near term. Traders remain vigilant, navigating through uncertainties surrounding central bank policies and economic indicators to gauge the market sentiment and identify trading opportunities in the currency markets.
