The EUR/JPY cross gained some ground, reaching approximately 167.20 during the early European session on Tuesday, buoyed by the Japanese Yen‘s continued decline. This marks the Yen’s second consecutive day of losses, providing support to the cross. Traders are keenly awaiting the release of Gross Domestic Product (GDP) data for the second quarter (Q2) from the Eurozone and Germany, scheduled for later today. Additionally, all eyes will be on the Bank of Japan‘s (BoJ) policy meeting on Wednesday.
Recent weaker-than-expected German IFO survey results and softer economic data from the Eurozone have intensified speculation of a potential rate cut by the European Central Bank (ECB). ECB President Christine Lagarde has emphasized a data-dependent approach, with the decision on September’s rate cut still pending.
Market participants will closely examine the GDP growth figures later today for insights that could influence the ECB’s rate decisions. The German economy is forecasted to grow by 0.1% quarter-on-quarter (QoQ) in Q2, while the Eurozone economy is projected to expand by 0.2% QoQ. Stronger-than-expected results could strengthen the Euro against the Yen.
Conversely, speculation surrounding a possible rate hike by the BoJ could bolster the Yen and limit further gains for the EUR/JPY cross. A Reuters poll of economists predicts that the Japanese central bank may increase rates by 10 basis points (bps) to 0.1% at its July meeting.
Additionally, data from the Statistics Bureau of Japan revealed a decrease in the country’s unemployment rate to 2.5% in June from 2.6% in May. This marks the first improvement in five months and surpasses the market consensus of 2.6%.
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