- The EUR/JPY collapses about 163.50 in the first bars of the European session on Monday.
- The uncertainty about Trump tariffs supports refuge currencies such as JPY.
- EUROZONA inflation is triggered in April.
The EUR/JPY crossing extends the fall to around 163.50 during the first bars of the European session on Monday. The Japanese Yen (JPY) advances in front of the euro (EUR) in the face of the growing demand for safe refuge amid economic uncertainty. The confidence of the Sentix investors in the Eurozone will be published later on Monday. Commercial activity is expected to be contained on Monday due to a holiday in Japan.
The US president, Donald Trump, reiterated that China was open to a commercial agreement, but did not offer concrete details or a schedule. In addition, Trump said that USA has no plans to talk to Xi Jinping this week. The feeling of investors becomes negative due to persistent global commercial uncertainties, which provides some support to the JPY and acts as a wind against the crossing.
The Bank of Japan (BOJ) maintained its interest rate without changes in 0.5% unanimously and cut its growth forecast last week. The moderate guide of the Japanese Central Bank could be a positive factor for the JPY in the short term. The BOJ cut its prognosis of economic growth for the fiscal year that ends in March 2026 to 0.5% from 1.1% projected three months ago. It also reduced its growth forecast to an expansion of 0.7% for the following fiscal year from 1.0% in January.
As for the euro, eurozone inflation increased more than expected in April, which could complicate the path of the European Central Bank (ECB) to reduce interest rates even more in the coming months. The president of the ECB, Christine Lagarde, said that the Central Bank would be dependent on the data by making decisions about interest rates. The ECB cut the interest rates for the last time in April, carrying its ease rate to 2.25%, from a maximum of 4.00% in mid -2023.
And in Japanese faqs
The Japanese Yen (JPY) is one of the most negotiated currencies in the world. Its value is determined in general by the march of the Japanese economy, but more specifically by the policy of the Bank of Japan, the differential between the yields of the Japanese and American bonds or the feeling of risk among the operators, among other factors.
One of the mandates of the Bank of Japan is the currency control, so its movements are key to the YEN. The BOJ has intervened directly in the currency markets sometimes, generally to lower the value of YEN, although it abstains often due to the political concerns of its main commercial partners. The current ultralaxy monetary policy of the BOJ, based on mass stimuli to the economy, has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to fight against inflation levels of decades.
The position of the Bank of Japan to maintain an ultralaxa monetary policy has caused an increase in political divergence with other central banks, particularly with the US Federal Reserve. This favors the expansion of the differential between the American and Japanese bonds to 10 years, which favors the dollar against Yen.
The Japanese Yen is usually considered a safe shelter investment. This means that in times of tension in markets, investors are more likely to put their money in the Japanese currency due to their supposed reliability and stability. In turbulent times, the Yen is likely to be revalued in front of other currencies in which it is considered more risky to invest.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
