EUR/JPY Rallies Despite ECB Concerns
- EUR/JPY hits 14-week high near 164.50
- ECB officials cautious about Eurozone economic risks
- Focus on BoJ Ueda’s speech for interest rate guidance
The EUR/JPY pair surged to a fresh 14-week high near 164.50 during the European session, defying concerns from some European Central Bank (ECB) officials about the Deposit Facility Rate dropping below neutral levels. The current rate stands at 3.25% after three rate cuts this year.
ECB Concerns and Economic Outlook
ECB officials are considering further interest rate cuts due to worries about inflationary pressures in the Eurozone remaining below 2% amidst weak economic growth. Germany, the largest Eurozone nation, is forecasted to see a 0.2% output decline this year, marking the second consecutive year of contraction.
Economists estimate the ECB’s neutral rate at around 2% to 2.25%, indicating a potential for continued easing in 2025 if rates fall below this level. Market expectations of another rate cut in the upcoming December meeting have already impacted the Euro’s performance against major currencies.
Euro Performance Today
The Euro (EUR) was the strongest against the Japanese Yen today, as indicated by the percentage changes against major currencies. The EUR/JPY pair showed resilience amidst uncertainty surrounding potential interest rate hikes by the Bank of Japan (BoJ) for the remainder of the year.
BoJ Governor Ueda’s Speech
Investors are eagerly awaiting BoJ Governor Kazuo Ueda’s speech at the IMF-hosted “Governors Talk” for updated guidance on interest rates. With the BoJ’s recent policy meeting offering no hints of further rate adjustments and US election risks looming, Ueda’s speech could provide crucial insights for market participants.
Key Takeaways
- The EUR/JPY pair reached a 14-week high despite ECB concerns over rate cuts.
- Germany’s economic contraction and Eurozone inflation uncertainties are driving ECB’s cautious approach.
- Market participants anticipate further easing measures by the ECB in 2025.
- BoJ’s upcoming policy meeting and Ueda’s speech hold significance for interest rate guidance.