S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
- EUR/JPY attracts some buyers on Wednesday, though it lacks follow-through amid mixed cues.
- Reviving December BoJ rate hike bets underpin the JPY and act as a headwind for spot prices.
- A weaker USD and relatively hawkish ECB expectations underpin the EUR, supporting the cross.
The EUR/JPY pair struggles to capitalize on a modest intraday uptick on Wednesday and remains below the 181.00 round figure through the Asian session. Meanwhile, mixed fundamental cues keep spot prices confined in the weekly range and warrant some caution before placing aggressive directional bets.
The Japanese Yen (JPY) gets a minor lift after reports indicated that the Bank of Japan (BoJ) has intentionally shifted messaging to highlight the inflationary risks of a persistently weak domestic currency and that a December rate hike remains a live option. This comes on top of Japan’s Services Producer Price Index, which rose 2.7% in October from a year earlier and suggested that the BoJ remains on the cusp of durably meeting its 2% inflation target. This reaffirms hawkish BoJ expectations and underpins the JPY, capping the upside for the EUR/JPY cross.
The JPY bulls, however, seem reluctant amid concerns about Japan’s ailing fiscal position on the back of Prime Minister Sanae Takaichi’s pro-stimulus stance. Furthermore, the prevalent risk-on mood – as depicted by a generally positive tone around the equity markets – contributes to capping the safe-haven JPY. The shared currency, on the other hand, benefits from a broadly weaker US Dollar (USD) and seems unaffected by the second estimate of German GDP, which showed that the Eurozone’s largest economy remained stagnant in the third quarter of 2025.
Investors, however, seem convinced next year’s full-scale fiscal stimulus should be enough to finally improve conditions for the German economy. Germany’s 2026 draft budget projects around €525 billion in spending, marking a significant increase over the previous year. This, along with expectations that the European Central Bank (ECB) is done cutting interest rates, could underpin the Euro (EUR) and support the EUR/JPY cross. Traders now look to scheduled speeches from ECB’s chief economist Philip Lane and President Christine Lagarde for a fresh impetus.
