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- EUR/JPY struggles as the Euro faces challenges on increased risk aversion.
- US Vice President JD Vance confirmed that US–Iran talks in Islamabad ended without a deal.
- Rising energy costs boosted expectations of a near-term Bank of Japan rate hike.
EUR/JPY pares its daily losses but remains in the negative territory, trading around 186.60 during the Asian hours on Monday. The currency cross faced challenges as the risk-sensitive Euro (EUR) lost ground following the failure of the United States (US)-Iran peace talks. US Vice President JD Vance confirmed that the US–Iran talks in Islamabad ended without a deal following 21 hours of negotiations.
US President Donald Trump said Washington would begin blockading all ships entering or leaving the Strait of Hormuz, while US Central Command (CENTCOM) confirmed operations targeting maritime traffic to and from Iranian ports from 10 AM ET (14:00 GMT) on Monday.
Nordea’s Jan von Gerich and Tuuli Koivu, in their pre-ceasefire European Central Bank (ECB) outlook, projected four 25-basis-point rate hikes starting in June. While they now see downside risks to this view, they emphasize that broader price pressures persist and that even a resolution to the conflict would not eliminate the need for ECB tightening.
The downside of the EUR/JPY cross could be restrained as the Japanese Yen (JPY) struggles on stagflation concerns amid rising oil prices. Rising energy costs fueled expectations of a near-term Bank of Japan (BoJ) rate hike. The BoJ is set to hold its next policy decision on April 28, where officials will evaluate whether elevated global energy and commodity prices justify tightening.
The Sakura Report showed board members balancing upside inflation risks against downside growth risks following the April 6 branch managers’ meeting. All nine regions maintained that their economies were either “recovering moderately,” “picking up,” or “picking up moderately.”
