- The EUR/JPY lowers around 164.85 in the early Asian session on Monday.
The increase in the demand for shelter assets and speculation on increases in interest rates by the BOJ promotes the JPY.
The president of the ECB, Lagarde, said they are in a good position, after cutting 2%rates.
The EUR/JPY crossing weakens about 164.85, breaking the two -day streak during the early European session on Monday. The Japanese Yen (JPY) is strengthened in front of the euro (EUR) amid the growing acceptance that the Bank of Japan (Boj) will continue to raise interest rates. The confidence data of the Sentix investors of the Eurozone for June will be published later on Monday.
Japan’s Gross Domestic Product (GDP) contracted at an annual rate of 0.2% in the first quarter, compared to the initial estimate of a 0.7% drop, the Japan cabinet office showed on Monday. Meanwhile, the Japanese economy showed no growth during the quarter in the first quarter (Q1) of 2025, exceeding market expectations and prior estimate of -0.2%.
An upward review of the GDP of Japan has reaffirmed the bets for a rise in the Boj rates and backed to the JPY. The Japanese Central Bank is scheduled to hold a two -day policy meeting next week.
At the front of the euro, the European Central Bank (ECB) announced last week that it cut the key rates at 25 basic points (PBS) after the June policy meeting. The president of the ECB, Christine Lagarde, said they could be approaching at the end of the flexibility cycle. Lagarde also said during the weekend that the Central Bank’s rates are now in a “good position” despite the highly high uncertainty caused by the tariff threats of the president of the US, Donald Trump.
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.
