EUR/JPY Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
• The European Central Bank (ECB) has taken a cautious approach, indicating no immediate interest rate changes despite recent economic growth in the Eurozone, favoring stability for the Euro.
• Oil prices are significantly above their recent average, which tends to support the Euro as energy import costs rise.
• Japan faces concerns about fiscal sustainability ahead of upcoming elections, which could create uncertainty for the Yen.
Range: EUR/JPY is likely to drift within its recent range as both currencies react to ongoing economic developments.
What could change it:
• Upside risk: A stronger-than-expected rebound in Germany’s retail sales data could enhance Euro strength.
• Downside risk: Renewed speculation about Bank of Japan fiscal policy or intervention may weaken the Yen further.