At the time of writing on Wednesday, EUR/JPY was trading around 185.10, up 0.55% on the day and back to 185. This development is mainly supported by the continued feeble performance of the Japanese yen (JPY), as investors remain concerned about Japan’s fiscal outlook and political uncertainty ahead of early lower house elections.
The Japanese yen remains under pressure ahead of this weekend’s elections. Prime Minister Sanae Takaichi’s ruling Liberal Democratic Party is expected to strengthen its majority, supported by a platform focusing on higher public spending, tax cuts and a novel security strategy. This expansionary fiscal stance has revived concerns about Japan’s public debt sustainability.
The prime minister’s statement, initially interpreted as favoring a weaker yen to support exports, reinforced the perception of official tolerance for a softer currency, although she later clarified her comments. However, fears of coordinated intervention by Japan and the United States and the slightly more hawkish stance of the Bank of Japan (BoJ) limit a sharper depreciation of the Japanese currency.
In the euro area, the latest macroeconomic data give mixed signals. The euro zone’s purchasing managers’ index (PMI) for services reached 51.6 in January, a four-month low, below market expectations and falling sharply compared to December. In Germany, a downward revision of the HCOB Services PMI to 52.4 confirms that activity in the region’s largest economy remains low. These numbers highlight the fragility of the economic recovery and limit the fundamental attractiveness of the euro (EUR).
In terms of inflation, price pressures continue to ease. The harmonized index of consumer prices (HICP) for the euro area rose 1.7% y/y in January, in line with expectations, but fell from 1.9% in December, while core inflation held steady at 2.3%. This cooling of inflation justifies a cautious stance of monetary policy.
According to Deutsche Bank, the European Central Bank (ECB) is likely to leave interest rates unchanged until 2026, with the next move potentially being an escalate in 2027. “The path of monetary policy in 2026 will depend on who wins the competition between external and internal conditions. Our baseline scenario assumes that country resilience prevails, leading to increases in 2027.” – noted the bank’s research team.
In such an environment, EUR/JPY momentum is driven more by the structural weakness of the Japanese yen than by the strength of the euro. As long as political and fiscal uncertainty weighs on the Japanese currency, the cross rate may remain supported despite still shaky fundamentals in the euro zone.
Price in euro today
The table below shows the current percentage change of the euro (EUR) against the main listed currencies. The euro was strongest against the Japanese yen.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.06% | -0.14% | 0.66% | 0.19% | 0.02% | 0.56% | 0.14% | |
| EUR | -0.06% | -0.20% | 0.59% | 0.12% | -0.05% | 0.49% | 0.08% | |
| GBP | 0.14% | 0.20% | 0.80% | 0.33% | 0.16% | 0.69% | 0.28% | |
| JPY | -0.66% | -0.59% | -0.80% | -0.45% | -0.62% | -0.10% | -0.50% | |
| BOOR | -0.19% | -0.12% | -0.33% | 0.45% | -0.17% | 0.36% | -0.04% | |
| AUD | -0.02% | 0.05% | -0.16% | 0.62% | 0.17% | 0.54% | 0.13% | |
| NZD | -0.56% | -0.49% | -0.69% | 0.10% | -0.36% | -0.54% | -0.40% | |
| CHF | -0.14% | -0.08% | -0.28% | 0.50% | 0.04% | -0.13% | 0.40% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select Euro from the left column and move along the horizontal line to US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
