Investors price in a 25-basis-point ECB rate hike for June despite mixed Eurozone economic data and weaker retail sales.
EUR/JPY climbed to 185.85, up 0.12% on Thursday, driven by expectations of further European Central Bank tightening. Markets anticipate a 25-basis-point rate hike in June, lifting the deposit rate to 2.25%, with another increase likely in September.
Eurozone data presented a mixed outlook. May’s Services and Composite PMI figures were revised higher but remained in contraction territory. April’s Producer Price Index confirmed persistent inflation, while retail sales fell 0.4% month-over-month, missing expectations for a 0.3% decline.
The Japanese Yen faced pressure from BoJ policy uncertainty, though intervention risks and potential rate hikes provided some support. Analysts caution that ECB hawkishness may not sustain Euro gains long-term.