- EUR/JPY recovers from a two-day losing streak despite BoJ’s verbal interventions.
- The risk-off sentiment could limit the potential of the cross-pair.
- Differences of opinion among ECB officials reflect the complex situation surrounding the Eurozone economy.
EUR/JPY recovers from the two-day losses, trading higher around 156.20 during the Asian session on Wednesday. The cross pair receives upward support despite the verbal interventions by Japanese authorities to protect the domestic currency.
Japan’s Finance Minister, Shunichi Suzuki, has reiterated the government’s stance against rapid currency movements, expressing disapproval. Suzuki emphasized that the government will consider various options to counter excessive moves in the foreign exchange market.
Masato Kanda, Japan’s top currency diplomat, echoed Suzuki’s sentiments and refrained from commenting on whether Japan had intervened in the foreign exchange market.
Indeed, the Japanese Yen often sees increased demand during risk-off periods as investors seek safety. The combination of Japan’s finance minister expressing concern about rapid currency moves and the overall risk-off sentiment appears to be supporting the Yen’s safe-haven appeal, which could put a ceiling on the advance of the EUR/JPY cross pair.
The Eurozone seems to be in a state of wait-and-see regarding interest rate hikes from the European Central Bank (ECB). Recent comments from ECB officials suggest a cautious approach, with a focus on inflation targeting.
ECB Governing Council member Tuomas Välimäki doesn’t see a stagflation prospect in the euro area, suggesting a more optimistic view. On the other hand, ECB Chief Economist Philip Lane acknowledges that the ECB has more work to do to reach the inflation target, indicating a more cautious stance.
These differing perspectives may reflect the complexities and uncertainties surrounding the Eurozone’s economic situation, which may act as a headwind for the Euro. The upcoming release of economic indicators like the Producer Price Index (PPI) and Retail Sales will likely provide further insights into the Eurozone’s economic overview.