The EUR/JPY market is currently range-bound.
Recent data shows the euro struggling due to a contraction in German exports and slowing retail sales across the Eurozone. This has dampened investor sentiment. Meanwhile, the Japanese yen has experienced some support from the Bank of Japan’s recent interest rate hike, although plans for significant government spending might pressure the yen further.
Expected trading over the next month or two suggests the EUR/JPY will remain within its recent range, with fluctuations around current levels.
An upside risk for the euro may surface if European Central Bank policy swiftly adjusts in response to rising inflation. On the downside, any escalation in political tensions or further economic downturns in the Eurozone could weaken the euro significantly. For the yen, a surprising shift in Japanese inflation rates could either bolster or weaken its position.