EUR/JPY falls by some 0.18% on Tuesday as the Japanese Yen (JPY) strengthens after US Treasury Secretary Scott Bessent said excess volatility in the FX markets is undesirable.
At the time of writing, the cross-pair trades at 184.93 after peaking at around 185.46
Yen gains as US-Japan officials warn against FX volatility Bessent met with the Japanese Prime Minister Sanae Takaichi during his trip to Tokyo. He stated, “I believe the fundamentals of the Japanese economy are strong and resilient, and that will be reflected in the exchange rate.” His comments confirmed what the Japanese Finance Minister Satsuki Katayama said earlier, that she and Bessent reaffirmed close efforts to tackle exchange rate moves. Inflationary pressures build in Europe; ECB expected to hike Data in Europe revealed that Germany’s Harmonized Index of Consumer Prices (HICP) rose by 2.9% YoY in April, as expected.
Other data showed that economic sentiment in Germany improved in the ZEW Survey of Economic Sentiment from May, rising to -10.2, up from -17.2 and exceeding forecasts of -19.8. Meanwhile, money markets had begun to price in European Central Bank (ECB) rate hikes due to high energy prices sparked by the US-Iran conflict. Data from Prime Terminal revealed a 92% chance for a 25 basis points increase at the ECB’s June 11 meeting, with traders seeing the ECB’s Deposit Rate ending the year at 2.75%.