Markets price in over 90% odds of an ECB September hike amid sticky inflation and stronger-than-expected Eurozone growth.
EUR/JPY climbed 0.44% to 181.70 on Monday, driven by rising expectations of European Central Bank tightening and persistent yen weakness. Investors now assign a 90% probability to a September rate hike, with two additional increases priced in by April 2025.
Eurozone inflation accelerated to 2.9% year-over-year in July, while core inflation unexpectedly rose to 2.5%. The economy expanded 0.4% in Q2, doubling consensus estimates and marking its strongest growth since early 2025.
The yen remained under pressure despite Japan’s $34 billion intervention last week, as authorities reiterated readiness to act further. Weakness persists amid fiscal concerns and diverging monetary policy outlooks.