The EUR/JPY pair edged higher on Thursday, trading around 176.30, up 0.20% on the day. The move was driven by weaker demand for the Japanese Yen (JPY) as market risk sentiment improved slightly, while the Euro (EUR) held firm ahead of key central bank commentary.
Risk Appetite Limits Yen Demand
The Japanese Yen lost ground amid calmer global market conditions, reducing demand for safe-haven assets. Political uncertainty in Japan is also weighing on the currency. The split between the ruling Liberal Democratic Party (LDP) and its coalition partner Komeito has opened the door to potential leadership changes.
Markets are watching the possible appointment of Sanae Takaichi as Japan’s first female Prime Minister. Known for her support of Abenomics-style fiscal stimulus, her leadership could signal a continuation of accommodative monetary policy from the Bank of Japan (BoJ). Analysts at OCBC note that ongoing political uncertainty could delay BoJ policy normalization, even if economic conditions suggest a rate hike is warranted.
Euro Supported Ahead of ECB Remarks
The Euro remained steady ahead of speeches by European Central Bank (ECB) President Christine Lagarde and other policymakers, including during a panel at the IMF’s “Global Economy” debate later in the day. Markets are seeking any guidance on interest rate direction amid signs of easing inflation in the Eurozone.
Recent comments from ECB officials suggest a pause in rate cuts. Governing Council member Pierre Wunsch stated the chance of another rate cut is “receding,” while Martin Kocher added the ECB is “at or very near the end” of its cutting cycle.
Geopolitical Factors Also in Play
Elsewhere, uncertainty surrounding US-China trade relations continues to weigh on market optimism. While U.S. Treasury Secretary Scott Bessent said the U.S. is not seeking a full economic decoupling from China, he warned Beijing is erecting new trade barriers, potentially prompting U.S. policy responses.
In France, political tensions remain in the spotlight. Although Prime Minister Sébastien Lecornu survived a no-confidence vote, a second vote is scheduled for later Thursday, keeping investors cautious about Eurozone political stability.
Euro Leads Against Yen in Currency Markets
According to today’s forex heat map, the Euro posted its strongest performance against the Japanese Yen, rising 0.26%. Here’s a snapshot of the Euro’s daily performance against major currencies:
| Currency Pair (EUR as base) | Change (%) |
|---|---|
| EUR/USD | +0.12% |
| EUR/JPY | +0.26% |
| EUR/GBP | -0.16% |
| EUR/CAD | +0.08% |
| EUR/AUD | +0.04% |
| EUR/NZD | -0.13% |
| EUR/CHF | +0.07% |
The EUR/JPY pair remains supported above 176.00, reflecting ongoing improvement in market sentiment, with investors now awaiting cues from central bankers and geopolitical developments.
