EUR/JPY climbs to around 162.20 in Monday’s Asian session.
EU considers tweaking methane rules for US gas to help trade talks, Reuters said.
Rising expectations of a BoJ rate hike might boost the JPY and cap the upside for the cross.
The EUR/JPY cross trades in positive territory for the fourth consecutive day near 162.20 during the Asian trading hours on Monday. The Euro (EUR) strengthens against the Japanese Yen (JPY) amid encouraging signals of trade talks between the US and the European Union.
US President Donald Trump's trade war remains a source of deep uncertainty. However, the European Commission is working on its offer for trade talks with the US to attempt to avoid Trump's planned tariffs, with both sides signaling that energy could form part of a broader trade deal. The optimism surrounding trade negotiation could provide some support to the shared currency against the JPY in the near term.
The upside for the Euro might be limited due to the dovish stance of the European Central Bank (ECB). The ECB decided to cut its main interest rate by a quarter of a percentage point to 2.25% at its April meeting last week. ECB President Christine Lagarde said during the press conference that US tariffs on EU goods, which had increased from an average of 3% to 13%, were already harming the outlook for the European economy.
On the other hand, the rising speculation that the Bank of Japan (BoJ) will continue raising interest rates could lift the JPY and act as a headwind for EUR/JPY. BoJ Governor Kazuo Ueda said last week that Japan's real interest rates remain very low and that the BoJ is expected to keep raising interest rates if the economy and prices move in line with projections. The view was further echoed by BoJ board member Junko Nagakawa.
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