The EUR/JPY pair climbed above 157.50 on Wednesday as traders positioned themselves ahead of crucial Eurozone and German PMI data, which could provide fresh insights into the region’s economic health. The euro found support amid growing speculation about the European Central Bank’s (ECB) next policy moves, while the yen remained under pressure due to diverging monetary policies.
Market sentiment has been cautiously optimistic, with investors watching for signs of economic resilience in the Eurozone. A stronger-than-expected PMI reading could reinforce expectations that the ECB will maintain its current stance for longer, giving the euro an additional boost. On the other hand, any signs of slowing business activity could dampen confidence, limiting further gains.
The Bank of Japan’s ultra-loose monetary policy continues to weigh on the yen, keeping it underperforming against the euro and other major currencies. With Japanese policymakers showing little urgency to tighten policy, the yen’s weakness has allowed the EUR/JPY pair to remain supported despite external uncertainties.
The US Dollar’s movement has also played a role in influencing currency flows, with broader risk appetite driving investors away from safe-haven assets like the yen. As global markets stabilize, traders have been more willing to take on risk, shifting toward higher-yielding assets, including the euro.
Technical analysts note that EUR/JPY faces resistance near 158.00, with a sustained push beyond this level needed to extend its rally. If the PMI data disappoints, the pair could see a pullback, testing lower support levels. However, for now, momentum remains in favor of the euro, with the yen struggling to find catalysts for a meaningful recovery.
With upcoming economic reports and central bank signals expected to drive volatility, traders will be watching closely for any shifts in sentiment. Until then, the euro’s advantage over the yen remains intact, fueled by policy divergence and cautious optimism surrounding the Eurozone’s economic outlook.
