- EUR/JPY declines towards the 163.00 level, testing crucial support levels represented by the ascending trendline and the 200-day Exponential Moving Average (EMA).
- The Euro faces renewed downward pressure following a downward revision of the first-quarter GDP figures, despite positive industrial output data.
- Heightened demand for safe-haven assets provides a boost to the Japanese Yen amidst a backdrop of cautious risk appetite in global markets.
The EUR/JPY pair extended its bearish momentum for the second consecutive trading session on Thursday, depreciating by 0.5% to trade in the vicinity of 163.00. The Japanese Yen (JPY) garnered strength as investors sought refuge in safe-haven assets amid growing global uncertainties. The Euro (EUR) experienced selling pressure after recent Eurozone economic data revealed a moderation in growth, prompting market participants to reassess the near-term economic outlook for the region.
The latest economic releases indicated that the Eurozone economy expanded by 0.3% in the first quarter, slightly below the initial estimate of 0.4%. However, this still marks the sixth consecutive quarter of economic expansion for the region. The annual growth rate remained steady at 1.2%. Notably, industrial production demonstrated a stronger-than-anticipated performance, surging by 2.6% month-over-month in March. Despite the positive industrial output figures, the slightly weaker Gross Domestic Product (GDP) reading reinforces the pressure on the European Central Bank (ECB) to maintain a dovish monetary policy stance, particularly in light of the continued moderation in inflationary pressures. The ECB is closely monitoring incoming economic data to assess the appropriate timing and magnitude of future policy adjustments. Recent inflation data showed a further easing of price pressures, reinforcing expectations that the central bank may need to consider further stimulus measures to support economic growth.
The Japanese Yen is benefiting from support stemming from broader macroeconomic and geopolitical developments. Persistent uncertainties surrounding global trade relations have exerted downward pressure on the US Dollar (USD), thereby providing a lift to other major currencies, including the Yen. Furthermore, a widespread rally in Asian currencies is underway, fueled by speculation that the US administration is inclined towards a weaker Dollar policy to address trade imbalances. Washington has consistently asserted that undervalued Asian currencies provide an unfair competitive advantage to exporters in the region. Market attention is now increasingly focused on the forthcoming US-Japan trade negotiations, with Tokyo aiming to finalize a comprehensive trade agreement by June. These negotiations are expected to cover a wide range of issues, including tariffs, market access, and intellectual property rights. The outcome of these discussions will likely have significant implications for the future trade relationship between the two countries and could influence broader global trade dynamics.
