Eurozone GDP growth of 0.4% QoQ in Q2 supports ECB tightening prospects, lifting the Euro against the Yen.
EUR/JPY edged up 0.15% to around 184.15 on Friday, reflecting stronger bets on ECB rate hikes despite rising expectations of BoJ tightening. Markets now price in a September ECB rate increase, which would be the second this year, as inflation risks remain elevated.
Eurostat confirmed Eurozone GDP grew 0.4% QoQ in Q2, matching preliminary estimates and rebounding from stagnation in Q1. Annual growth accelerated to 1%, up from an upwardly revised 0.5% in Q1, signaling improving economic momentum.
However, the pair’s upside is capped by speculation the BoJ may raise rates as soon as September. The divergent monetary policy outlooks continue to drive EUR/JPY volatility.