- The euro slides in front of the safe refuge as the commercial risks between the EU and the US increase before the ECB decision.
- Yen finds support while Ishhiba maintains power despite the electoral setback.
- The EUR/JPY lows as the bullish impulse is moderate below the recent maximums.
The Euro (EUR) is weakening in front of the Japanese Yen (JPY) after the clarity after the elections in Japan and the renewed concerns about the commercial negotiations between the EU and the US.
At the time of writing, the EUR/JPY remains just above the support level of 172.00 while the bullish impulse shows signs of fading.
Yen finds support while Istiba maintains power despite the electoral setback
The result of the elections in Japan gave a temporary impulse to Yen. Although the ruling coalition of Prime Minister Ishiba lost its close majority in the upper house for three seats on Sunday, it is likely to remain in power and could still advance in the legislation with the support of smaller parties.
Investors have hosted this result, relieved that a low tax opposition agenda can be avoided and that the Ishiba government remains in place to continue trade negotiations with the US with the USA before the deadline of August 1.
The chief negotiator of Japan, Ryosei Akazawa, is expected to meet with US Treasury Secretary, Scott Besent, and Commerce Secretary Howard Lutnick. Japan continues to wish tensions and avoid a 25% reciprocal tariff that would affect almost all Japan exports.
The euro under pressure as commercial risks between the EU and the US increase before the ECB
Meanwhile, the European Union (EU) is struggling to advance in its own trade negotiations with the US with the EU and USA
This will exert a significant pressure on the members of the block, especially the economies promoted by exports, such as the largest EU economy, Germany.
In addition, the European Central Bank Bank Survey (ECB), published on Monday, showed that Euro Zone companies remain modestly optimistic. However, companies are seeing pressure on profit margins.
This reinforces the expectations that the ECB will maintain a cautious posture in its next rate decision on Thursday, potentially pointing out a cut later this year.
The weakening inflation perspective is weighing on the euro and contributing to the recess of the EUR/JPY from the recent maximums.
EUR/JPY is consolidated as the bullish impulse is moderated below recent maximums
The EUR/JPY retreated on Monday after reaching a maximum of several years about 173.25 last week. The price action is consolidating just above the support zone of 172.00.
The daily chart indicates that the impulse is softening as the relative force index (RSI) leaves the territory of overcompra. While the torque is maintained above the simple mobile average (SMA) of 170.88, the underlying bullish structure remains intact.
EUR/JPY DAILY GRAPH
A rupture below this level could expose deeper setbacks around 169.30 and 166.20, while a sustained movement over 173.25 would open the door to a new impulse towards the 175.00 area.
Tariffs – Frequently Questions
Although tariffs and taxes generate government income to finance public goods and services, they have several distinctions. Tariffs are paid in advance in the entrance port, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and companies, while tariffs are paid by importers.
There are two schools of thought among economists regarding the use of tariffs. While some argue that tariffs are necessary to protect national industries and address commercial imbalances, others see them as a harmful tool that could potentially increase long -term prices and bring to a harmful commercial war by promoting reciprocal tariffs.
During the election campaign for the presidential elections of November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy. In 2024, Mexico, China and Canada represented 42% of the total US imports in this period, Mexico stood out as the main exporter with 466.6 billion dollars, according to the US Census Office, therefore, Trump wants to focus on these three nations by imposing tariffs. It also plans to use the income generated through tariffs to reduce personal income taxes.
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.