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<\/span><\/a>Trading characteristics of the EUR\/JPY pair<\/span><\/h2>\n\n\n\n
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The yen exerts the most significant influence on the currency pair<\/a>’s performance. If there is a strong directed movement of the JPY, the pair’s quotes are likely to follow it<\/li>\n\n\n\n
The pair is traded round the clock from Monday to Friday, with the highest activity observed during the Asian, European, and American trading sessions<\/a><\/li>\n\n\n\n
The EUR\/JPY pair experiences high daily volatility<\/a>, typically around 1,000 pips<\/li>\n\n\n\n
Thanks to its popularity and high liquidity, the spread for this pair ranges from 10 to 15 pips on a quiet market<\/li>\n<\/ul>\n\n\n\n
<\/span><\/a>Fundamental factors influencing the EUR\/JPY quotes<\/span><\/h2>\n\n\n\n
<\/span><\/a>The European Central Bank’s monetary policy<\/span><\/h3>\n\n\n\n
The European Central Bank has been implementing a series of monetary policy tightening measures since July 2022 to curb rapidly rising inflation<\/a>. During this period, the interest rate<\/a> has progressively increased from 0% to 4.5%, with the most recent hike of 0.25% in September 2023. Inflation in the eurozone in September 2023 was up 4.3% from the previous year. It is worth noting that there was a more substantial increase of 5.2% in August. The ECB’s primary goal is to achieve a 2% inflation target within its monetary policy framework.<\/p>\n\n\n\n
Inflation in Europe is exhibiting signs of slowing growth rates, which might be a reason for temporarily suspending interest rate hikes. At its next meeting on 26 October 2023, the ECB will likely maintain the interest rate at 4.5% to monitor further inflation trends. The regulator currently presumes that inflation in the eurozone will remain above 3% next year, which could potentially support the case for future interest rate increases.<\/p>\n\n\n\n
<\/span><\/a>The Bank of Japan’s monetary policy<\/span><\/h3>\n\n\n\n
The Japanese economy has been in deflation for over 20 years. This phenomenon is opposite to inflation, in which the general price of goods and services decreases, negatively affecting the economy’s growth rate. The Bank of Japan and the country’s government have been trying to combat deflation over the years by using a zero-interest rate and implementing a quantitative easing (QE<\/a>) policy, involving injecting additional monetary funds into the economy.<\/p>\n\n\n\n
The yen’s low interest rate makes it attractive for borrowing to fund investments. Core inflation has risen recently in Japan, with the indicator exceeding the central bank’s target level of 2% for 20 months in a row. However, Kazuo Ueda, the Bank of Japan's governor, is not rushing to tighten monetary policy. First, the country has just overcome long-standing deflation; second, export-oriented Japan benefits from a weak national currency as its goods cost less than those of European competitors. Therefore, an interest rate increase may only be expected if inflation in the country rises at an extremely high pace.<\/p>\n\n\n\n
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<\/span><\/a>Economic development indicators of the eurozone and Japan<\/span><\/h3>\n\n\n\n
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Monetary policies of the European Central Bank and the Bank of Japan: changes in interest rates, QE and QT programmes, foreign exchange interventions<\/li>\n\n\n\n
Unemployment Rate<\/li>\n\n\n\n
GDP<\/a> Growth Rates (GDP)<\/li>\n\n\n\n
Inflation Indices<\/a> (CPI<\/a>, PPI<\/a>)<\/li>\n\n\n\n
Industrial Production Index<\/li>\n\n\n\n
Retail Sales<\/li>\n\n\n\n
Trade Balance<\/a><\/li>\n\n\n\n
A business activity report by the Bank of Japan (Tankan survey)<\/li>\n\n\n\n
Economic Sentiment Indices for the eurozone (ZEW, IFO)<\/li>\n<\/ul>\n\n\n\n
<\/span><\/a>EUR\/JPY performance in 2023<\/span><\/h2>\n\n\n\n
Throughout 2023, the EUR\/JPY pair has been consistently moving upward. The quotes rose from a low of 138.00, where they stood at the beginning of the year, to a 15-year high of 159.76 in late August. The lack of clear signals<\/a> from the Bank of Japan indicating potential monetary tightening exerts pressure on the yen, driving the currency pair’s quotes further up.<\/p>\n\n\n\n
At the same time, the ECB has been actively raising interest rates throughout 2023 in response to mounting inflationary pressure. The difference between the rates resulted in the further weakening of the yen and the gradual growth of the pair’s exchange rate. At the time of writing on 17 October 2023, the quotes were trading at 158.00, close to their annual high.<\/p>\n\n\n\n
$\"EUR\/JPY$
EUR\/JPY currency pair chart<\/em><\/figcaption><\/figure>\n\n\n\n
<\/span>EUR\/JPY live chart<\/span><\/h2>\n\n\n\n\n