Euro tumbles as Japanese Yen benefits from BoJ rate hike bets
EUR/JPY falls 1.11% on Monday and trades around 179.45 at the time of writing. The sharp decline in the cross mainly reflects the strong appreciation of the Japanese Yen (JPY), supported by growing expectations of monetary policy tightening by the Bank of Japan (BoJ).
The Euro (EUR) weakened against the Japanese Yen (JPY) on Monday, falling 1.11% to trade around 179.45. This decline was driven by growing expectations that the Bank of Japan (BoJ) would raise interest rates by 25 basis points at their meeting on September 17-18, and the possibility of a larger move to curb inflation and rising bond yields.
Speculation about potential Japanese government intervention in the foreign exchange market added further support to the Yen. Meanwhile, the Euro faced mixed economic signals from Germany, with industrial production falling 1.1% month-over-month in July, down from the previously reported 0.2% increase. On a year-over-year basis, German industrial production fell 1.6%.
In contrast, Eurozone growth was revised upward, with the Eurozone's gross domestic product expanding by 0.6% quarter-over-quarter in the second quarter, up from the previous estimate of 0.4%. This represented the strongest quarterly growth rate since the second quarter of 2022. Still, the EUR/JPY dynamics were largely determined by the strengthening of the Japanese Yen and the likelihood of imminent monetary tightening in Japan.
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