- EUR/JPY edges lower to around 164.85 in Monday’s early Asian session.
Rising safe haven demand and speculation over interest rate hikes by the BOJ boost the JPY.
ECB’s Lagarde said they are in a good position, after cutting rates to 2%.
The EUR/JPY cross weakens to near 164.85, snapping the two-day winning streak during the early European session on Monday. The Japanese Yen (JPY) strengthens against the Euro (EUR) amid the growing acceptance that the Bank of Japan (BoJ) will continue raising interest rates. The Eurozone Sentix Investor Confidence data for June is due later on Monday.
Japan’s Gross Domestic Product (GDP) shrank at an annual rate of 0.2% in Q1, compared to the initial estimate of a 0.7% fall, Japan’s Cabinet Office showed on Monday. Meanwhile, The Japanese economy showed no growth over the quarter in the first quarter (Q1) of 2025, coming in above the market expectation and the previous estimate of -0.2%.
An upward revision of Japan’s Q1 GDP has reaffirmed BoJ rate hike bets and underpinned the JPY. The Japanese central bank is set to hold a two-day policy meeting next week.
On the Euro front, the European Central Bank (ECB) announced last week that it lowered key rates by 25 basis points (bps) after the June policy meeting. ECB President Christine Lagarde said that they might be approaching the end of the easing cycle. Lagarde further stated over the weekend that the central bank rates are now in a “good position” despite the extremely high uncertainty being triggered by US President Donald Trump’s tariff threats.
