The EUR/JPY pair is seeing its third straight day of losses, slipping below the 183.00 handle to trade near 182.70 on Wednesday. This 0.50% intraday decline is largely driven by a resurgent Japanese Yen. The JPY is benefiting from Sanae Takaichi’s landslide victory, which has bolstered hopes for economic growth and gave the Bank of Japan more flexibility to normalize monetary policy. Furthermore, renewed chatter regarding potential government intervention is discouraging traders from betting against the Yen.
Meanwhile, the Euro remains somewhat resilient. While the ECB is holding a cautious stance and downplaying recent soft inflation data, the Euro is finding long-term support from structural developments, such as the newly finalized EU-India trade pact. Despite these positives for the Euro, the short-term momentum is firmly with the Yen as markets price in higher Japanese interest rates.
