- EUR/JPY weakens to near 184.35 in Thursday’s Asian session.
- BoJ’s Takata warned of inflation overshoot, reinforcing expectations of further BOJ tightening.
- US tariff uncertainty could weigh on the Euro.
The EUR/JPY cross loses ground to around 184.35 during the Asian trading hours on Thursday. The Japanese Yen (JPY) strengthens against the Euro (EUR) on hawkish comments from the Bank of Japan (BoJ) policymakers. Japan’s Tokyo Consumer Price Index (CPI) and the preliminary reading of the German CPI will take center stage later on Friday.
BoJ Board Member Hajime Takata warned of inflation overshoot risks, reinforcing expectations of further BoJ tightening and lifting the JPY. Takata added that the central bank must conduct further rate hikes in a gradual manner. He said that during the process of normalizing monetary policy, it is desirable for the BoJ to avoid causing market volatility that significantly exceeds the risk premium demanded by market participants.
Nonetheless, BoJ Governor Kazuo Ueda stated that while rate hikes will continue if economic forecasts are met, the central bank will wait for data from the March and April meetings to make further decisions.
The Euro could face some selling pressure from cooling Eurozone inflation and escalating trade tensions following fresh US tariffs. The European Parliament agreed on Monday to postpone a vote on the EU’s trade agreement with the US due to the higher import levies.
The US trade representative, Jamieson Greer, said on Wednesday that the US tariff rate for some countries will go up to 15% or higher from the newly imposed 10% without naming any specific trading partners or other details.
