The recent trends in the EUR to JPY exchange rate are influenced by a combination of geopolitical tensions, monetary policy shifts, and economic performance indicators. As of November 11, 2025, the euro (EUR) has been affected significantly by diminishing hopes for peace in Ukraine and softer-than-expected inflation figures from Germany. These developments have led to a reassessment of expectations regarding the European Central Bank's (ECB) policies, leaning towards a dovish stance that could result in interest rate cuts by late 2025.
Analysts note that the ECB's potential shift from its current rate of 4.0% to 3.5% is likely to influence the euro's strength, thereby impacting its exchange rates against the Japanese yen (JPY). Currently, the EUR/JPY rate stands at 180.9, which is about 2.5% above its three-month average of 176.5, indicating a period of relative strength for the euro in this pairing. However, this situation could quickly change based on the evolving economic and geopolitical factors.
In Japan, the Bank of Japan (BOJ) has maintained a conservative approach to monetary policy, emphasizing low interest rates to support growth. This, combined with a significant yield differential between Japanese government bonds and U.S. Treasury yields, continues to exert pressure on the yen. Additionally, the recent election of Prime Minister Sanae Takaichi, with expectations of expansionary fiscal policies, has further fueled a bearish outlook for the yen.
Market sentiment is also impacted by the broader economic conditions. The euro has been influenced by the energy market, particularly oil prices, which have shown volatility. Recently, oil trades at approximately $63.30, 2.5% below its three-month average, reflecting fluctuating energy costs that can indirectly affect the euro's value given its reliance on energy imports.
Overall, the outlook for the EUR to JPY exchange rate remains contingent on various driving factors, including the ECB's monetary policy decisions, the ongoing geopolitical situation in Ukraine, Japan's fiscal policies under new leadership, and global financial conditions. Investors should closely monitor these developments to optimize their strategies for international transactions involving these two currencies.
