The post EUR/JPY continues drifting higher on wide interest-rate differential, lack of intervention appeared on BitcoinEthereumNews.com.

EUR/JPY extends its uptrend as the Euro outperforms the Japanese Yen due to the higher interest rates in the Eurozone.  After suspected direct intervention by the Japanese authorities to strengthen the Yen in early May there have been no follow ups.  Weak data from Japan has lowered expectations the BoJ will be in a position to continue raising interest rates, further weakening JPY.  EUR/JPY extends its uptrend on Monday, clocking up gains of over two-tenths of a percent to reach 169.50s, as the wide interest-rate differential between the Eurozone and Japan continues to favor the Euro (EUR) over the Japanese Yen (JPY) – relatively higher interest rates attract greater foreign capital inflows.  Additionally, in the absence of recent direct intervention in currency markets by the Japanese authorities to strengthen the JPY, the pair has been allowed to creep higher. The last time a suspected intervention took place was in late April and early May when EUR/JPY experienced sharp declines for no apparent reason leading to unconfirmed speculations of intervention.  The Bank of Japan’s (BoJ) decision to not repeat a reduction in its bond buying operations on May 17 despite doing so on May 13 further led the JPY to weaken. Reductions to bond buying are seen as a form of policy tightening – like raising interest rates – thus the decision not to go ahead was seen as a slight shift to an easier stance.   A string of weak data releases in Japan, including a surprise 2.0% annualized drop in Q1 GDP, Tokyo CPI coming out lower than expected, and weak wage growth data in Q1 further suggest the BoJ will probably delay its next interest rate hike, after a one-off raise in March, giving EUR/JPY a back wind. The Euro, meanwhile, is strengthening as positive data for the region suggests…

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Filed under: News - @ May 20, 2024 11:18 pm