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EUR/JPY recovered its intraday losses and traded close to 160.50 during Wednesday’s Asian trading session. However, the cross faces challenges as the yen strengthens ahead of a key meeting of the Ministry of Finance (MOF), the Financial Services Agency (FSA) and the Bank of Japan (BoJ) to discuss international financial markets. A joint statement is expected after the meeting, but it is likely to be short on actionable insights.
The yen found support amid increased safe-haven demand for currencies amid heightened global recession fears sparked by tariff tensions. Also boosting the yen’s appeal, U.S. President Donald Trump agreed to meet with Japanese officials to launch trade talks, further boosting hopes for a U.S.-Japan trade deal. In addition, the Bank of Japan (BoJ) is expected to continue raising interest rates through 2025 as domestic inflation persists, further exerting upward pressure on the yen.
The euro (EUR) faced headwinds from rising risk sentiment after the United States imposed retaliatory tariffs on Wednesday. The euro also continued to come under pressure as market participants grew more dovish on expectations from the European Central Bank (ECB).
Several ECB policymakers, including Bank of Italy Governor Piero Cipollone, Bank of France Governor Francois Villeroy de Galhau and Bank of Greece Governor Yannis Stournaras, have expressed support for further monetary easing.
Finance ministers from euro zone countries are due to meet in Warsaw on Friday to discuss strategies to mitigate the impact of U.S. tariffs. Stournaras recently said the new tariffs would not hinder April’s rate cut, claiming inflation forecasts remain unchanged. Stournaras estimates that the tariffs could reduce eurozone GDP growth by 0.3%-0.4% in the first year.
Polish Finance Minister Andrzej Domanski warned that supply chain disruptions and higher costs for businesses could undermine European growth and put pressure on regional currencies, pointing to wider impacts. Domansky highlighted the potential for “negative social consequences” and higher consumer prices, citing a Reuters report.
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