Yen Bolstered Against Euro On Inflation Optimism
London: 11 January 2024 (TraderMade): Forget rollercoaster rides - the Euro vs. Yen just took a wild turn! The Yen's lead has been boosted by the hope of Japan's inflation finally behaving. Meanwhile, whispers of a European recession kept the Euro grounded.
The EURJPY pair declined by 0.18% to 159.6575 (as of 05:53 AM GMT).
Dive in for the latest on currencies and why Europe and Japan are headed in opposite directions.
Yen Feels the Optimism
Comments from the OECD chief, Cormann, fueled hope that Japan's inflation will finally hit the Bank of Japan's target. This optimism and expectations of gradual monetary tightening gave the Yen a boost. Cormann acknowledged the BoJ's cautious approach after years of deflation, but his confidence painted a brighter picture for the Japanese economy.
Contrast in Policy Stances
While Japan may tighten monetary policy, the European Central Bank (ECB) remains data-driven. Vice President de Guindos confirmed slower disinflation but raised concerns about a possible European recession in the latter half of 2023. This cautious stance and disappointing economic data, like Germany's shrinking Coincident Index, weighed on the Euro.
Technical Pullback and Data Watch
After its recent rally, the EUR/JPY pair retraced its steps, returning to the 159.60 level. Market participants watch further economic data, including the ECB's Economic Bulletin and German current account figures, for clues about the path ahead for both currencies.
Key Takeaways:
- An optimistic outlook for Japan's inflation and potential monetary tightening bolstered the Yen.
- Concerns about a possible European recession and the ECB's data-dependent approach weakened the Euro.
- Upcoming economic data from both regions could provide further direction for the EURJPY pair.
