EUR/JPY slumps to near 159.00 as Japanese Yen strengthens amid safe-haven demand
- EUR/JPY tumbles to near 159.00 as the safe-haven demand of the Yen increases.
- The BoJ is expected to raise interest rates again this year.
- Investors anticipate German debt reforms to accelerate inflationary pressures.
The EUR/JPY pair falls sharply to near 159.00 in European trading hours on Monday. The pair faces sharp selling pressure as the Japanese Yen (JPY) outperforms across the board amid dismal market sentiment.
Deepening doubts over the United States (US) economic outlook under the administration of President Donald Trump has increased the safe-haven appeal of assets, such as the Yen and Swiss Franc (CHF). Meanwhile, the US Dollar is facing strong selling pressure as signs of a slowdown in the US economy have prompted Federal Reserve (Fed) dovish bets.
Japanese Yen PRICE Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.16% | -0.03% | -0.68% | 0.06% | -0.31% | -0.29% | -0.31% | |
| EUR | 0.16% | 0.09% | -0.53% | 0.24% | -0.05% | -0.15% | -0.26% | |
| GBP | 0.03% | -0.09% | -0.68% | 0.11% | -0.14% | -0.31% | -0.29% | |
| JPY | 0.68% | 0.53% | 0.68% | 0.73% | 0.42% | 0.29% | 0.43% | |
| CAD | -0.06% | -0.24% | -0.11% | -0.73% | -0.41% | -0.35% | -0.40% | |
| AUD | 0.31% | 0.05% | 0.14% | -0.42% | 0.41% | -0.10% | -0.16% | |
| NZD | 0.29% | 0.15% | 0.31% | -0.29% | 0.35% | 0.10% | 0.06% | |
| CHF | 0.31% | 0.26% | 0.29% | -0.43% | 0.40% | 0.16% | -0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Apart from the safe-haven demand, firm expectations that the Bank of Japan (BoJ) will raise interest rates again this year. Such a scenario would reduce rate differentials of the BoJ against other major central banks.
Meanwhile, the Euro (EUR) is underperforming at the start of the week, except the US Dollar, as investors start digesting German debt reforms. Last week, German leaders agree to stretch borrowing limit or so-called “debt brake” to boost defense spending and stimulate economic growth. Investors expect German debt reforms would boost inflation in the Eurozone.
On Thursday, European Central Bank (ECB) President Christine Lagarde refrained from guiding the impact of German debt restructuring on the monetary policy and the inflation outlook. Lagarde said in the press conference after the policy decision that said the increased defense and infrastructure spending is still a "work in progress" and the ECB "needs time" to understand the impact.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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