The EUR/JPY pair has seen a strong recovery, moving from the intraday low of 161.40 to near 162.50 during today’s European trading session. This surge comes as the Japanese Yen faces pressure following the release of disappointing Trade Balance data for July.
Recent data revealed that Japan’s Merchandise Trade Balance slipped into a deficit of ¥621.84 billion in July, a significant shift from the surplus seen in June. This was driven by higher-than-expected growth in imports, weighing on the Yen’s performance.
Despite this setback, the Yen’s short-term outlook remains positive as expectations mount for the Bank of Japan (BoJ) to tighten its monetary policy further later this year. The BoJ’s potential interest rate hikes have gained traction following strong Q2 GDP growth figures.
Looking ahead, investors are eagerly awaiting Japan’s National Consumer Price Index (CPI) data for July, set to be released on Friday. Projections suggest that excluding fresh food, price pressures are expected to rise by 2.7%, surpassing the previous figure of 2.6%.
On the other hand, the Euro (EUR) is showing strength amid anticipations of gradual interest rate cuts by the European Central Bank (ECB). Market watchers predict rate reductions in September and potentially one more before the year ends.
Upcoming economic data to watch includes the flash Eurozone HCOB PMI for August, scheduled for publication on Thursday. Analysts believe the Composite PMI may see marginal improvement.
Economic Indicator Overview
Japan’s National Consumer Price Index (CPI) measures the price changes of goods and services purchased by households, excluding fresh food. This monthly report compares prices to the same month in the previous year. A higher reading typically favors the Japanese Yen (JPY), while a lower reading is considered bearish.
For more details on the National CPI ex Fresh Food (YoY) indicator, you can visit the Statistics Bureau website.
Stay tuned for further updates on these market events and their potential impact on currency movements.