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11/09/24
27
EUR/JPY Hits 1-Month Low as Yen Strengthens Amid Rate Hike Speculations
The EUR/JPY currency pair continues its downward trajectory for the second consecutive day, reaching a level not seen in over a month. The Japanese Yen (JPY) is gaining strength due to a combination of factors, including an overall risk-averse market sentiment and speculation surrounding potential interest rate hikes by the Bank of Japan (BoJ). These elements have contributed to a decline in the EUR/JPY cross as traders adjust their positions accordingly.
On Wednesday, the EUR/JPY dropped to the 158.20 range, marking its lowest point since early August. Although there was a slight recovery toward the end of the trading session, the pair remains approximately 0.30% lower for the day. This decline reflects sustained buying interest in the JPY, driven by market concerns ahead of significant U.S. consumer inflation data scheduled for release later in the day. The anticipation surrounding this data is influencing investor sentiment and generating movements toward safer assets.
Additionally, comments from BoJ officials are bolstering the JPY’s appeal. A board member highlighted that despite recent rate hikes, Japan’s real interest rates remain significantly negative, indicating continued monetary accommodation. She also mentioned the likelihood of adjusting easing policies should economic conditions align with expectations. On the other hand, the European Central Bank (ECB) is expected to cut rates in its upcoming September meeting due to decreasing inflation, which has further pressured the EUR against the JPY.
Interestingly, declining business confidence among Japanese manufacturers, as reported in a recent poll, has not significantly impacted the JPY’s strength. Sentiment in the manufacturing sector reached a seven-month low, while non-manufacturing sentiment has also dimmed. Nevertheless, these factors appear to be insufficient in reversing the bearish trend in the EUR/JPY, highlighting the current market inclination favoring sellers.
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