EUR/JPY Rises as ECB Rate Cut Bets Ease, Lagarde Speech in Focus
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EUR/JPY rose to around 165.75 in early Tuesday trading as reduced expectations of a substantial ECB rate cut in December support the Euro. Stronger Eurozone GDP figures have softened rate cut bets, while less dovish signals from the Bank of Japan (BoJ) and geopolitical risks may cap further gains for EUR/JPY. ECB President Christine Lagarde’s speech is anticipated to provide additional insights into the Euro’s direction.
EUR/JPY Rises on Reduced ECB Rate Cut Expectations
The EUR/JPY pair strengthened to around 165.75 during Tuesday’s early European session, bolstered by diminished expectations for a larger rate cut from the European Central Bank (ECB) in December. The Eurozone’s latest GDP data exceeded forecasts, prompting traders to scale back their expectations for aggressive ECB monetary easing. Markets are currently pricing in a 34 basis points (bps) rate cut, down from 42 bps earlier, reflecting a more cautious outlook.
Key ECB Signals Impacting Eurozone Monetary Policy
Recent comments from ECB policymakers have signaled a cautious approach to rate cuts. ECB Executive Board member Isabel Schnabel emphasized a “gradual” easing stance, while Bundesbank President Joachim Nagel urged restraint on further cuts. Traders will closely watch upcoming Eurozone inflation data for indications on how the ECB may proceed in its December meeting.
Limited Upside Due to Safe-Haven Demand and BoJ’s Stance
The upside potential for EUR/JPY remains constrained due to safe-haven flows favoring the Japanese Yen amid uncertainty around the U.S. presidential election and geopolitical concerns in the Middle East. Furthermore, BoJ Governor Kazuo Ueda’s recent comments hinting at a possible rate hike in Japan add support to the Yen, as he noted diminishing risks from U.S. and global economies.
Outlook: Lagarde Speech and Eurozone Data in Focus
With ECB President Christine Lagarde set to speak, investors will look for any additional clues regarding the ECB’s policy direction. The Eurozone’s November inflation report will also be critical in shaping rate cut expectations. In the meantime, EUR/JPY could encounter resistance as safe-haven dynamics favor the Yen amidst ongoing global uncertainties.
EUR/JPY Rises on Reduced ECB Rate Cut Expectations
The EUR/JPY pair strengthened to around 165.75 during Tuesday’s early European session, bolstered by diminished expectations for a larger rate cut from the European Central Bank (ECB) in December. The Eurozone’s latest GDP data exceeded forecasts, prompting traders to scale back their expectations for aggressive ECB monetary easing. Markets are currently pricing in a 34 basis points (bps) rate cut, down from 42 bps earlier, reflecting a more cautious outlook.
Key ECB Signals Impacting Eurozone Monetary Policy
Recent comments from ECB policymakers have signaled a cautious approach to rate cuts. ECB Executive Board member Isabel Schnabel emphasized a “gradual” easing stance, while Bundesbank President Joachim Nagel urged restraint on further cuts. Traders will closely watch upcoming Eurozone inflation data for indications on how the ECB may proceed in its December meeting.
Limited Upside Due to Safe-Haven Demand and BoJ’s Stance
The upside potential for EUR/JPY remains constrained due to safe-haven flows favoring the Japanese Yen amid uncertainty around the U.S. presidential election and geopolitical concerns in the Middle East. Furthermore, BoJ Governor Kazuo Ueda’s recent comments hinting at a possible rate hike in Japan add support to the Yen, as he noted diminishing risks from U.S. and global economies.
Outlook: Lagarde Speech and Eurozone Data in Focus
With ECB President Christine Lagarde set to speak, investors will look for any additional clues regarding the ECB’s policy direction. The Eurozone’s November inflation report will also be critical in shaping rate cut expectations. In the meantime, EUR/JPY could encounter resistance as safe-haven dynamics favor the Yen amidst ongoing global uncertainties.