During the early European trading hours on Thursday, the EUR/JPY cross has exhibited a subdued tone above the 165.00 mark. This downtick is attributed to growing anticipation surrounding potential rate adjustments by the Bank of Japan (BoJ) and concerns regarding FX intervention from Japanese authorities. Traders are eagerly awaiting the release of preliminary German and Eurozone HCOB Purchasing Managers Index (PMI) data for March, which is expected to provide fresh momentum for the market. At present, EUR/JPY is trading at 165.15, marking a marginal 0.03% decline for the day.
The recent decision by the Bank of Japan (BoJ) to hike interest rates for the first time in 17 years has sparked speculation among investors regarding the possibility of further rate increases throughout the year. Reports from the Nikkei newspaper suggest that the early rate hike could pave the way for additional adjustments before the year’s end, bolstering the Japanese Yen (JPY) against the Euro (EUR).
Moreover, verbal interventions from Japanese authorities are poised to strengthen the JPY while potentially limiting the upside potential of EUR/JPY in the short term. Japanese Finance Minister Shunichi Suzuki emphasized the monitoring of foreign exchange movements with a heightened sense of urgency, underlining the importance of maintaining currency stability.
On the European front, European Central Bank (ECB) President Christine Lagarde hinted at the possibility of interest rate cuts during the June meeting. Lagarde emphasized that data available by June would offer valuable insights into inflation trends and labor market conditions. Market analysts, as reported by Reuters, anticipate three rate cuts by the ECB by December, with the potential for a fourth adjustment.
In the upcoming sessions, market participants will closely monitor the release of the HCOB Purchasing Managers Index (PMI) data from Germany and the Eurozone, followed by the German Buba Monthly Report. Additionally, attention will be focused on Friday’s release of the Japanese National Consumer Price Index (CPI) for February, particularly the Core CPI inflation excluding Fresh Food, which is expected to show a rise from January’s figure of 2.0% to 2.8%. Traders are poised to capitalize on trading opportunities surrounding the EUR/JPY cross amid these key events.
