I see that EUR/JPY has fallen to below 183.00 and is currently around 182.80. The Japanese yen continues to strengthen as several factors converge. First is the LDP party’s victory led by Prime Minister Sanae Takaishi, which has led investors to expect economic stimulus policies and an increase in interest rates from the Bank of Japan.

Part of the pressure on EUR/JPY comes from the yen being supported by news that Japanese authorities may intervene to curb the yen’s depreciation, along with the US dollar weakening due to less robust US economic data, which provides additional support for the yen.

What’s interesting is that the euro continues to receive support from the European Central Bank, which has maintained a steady policy since the end of the 6-year easing last year, because the eurozone economy has grown strongly. In addition, the newly signed EU-India trade agreement is good news for the euro: it will eliminate tariffs on goods of over 90% over seven years and reduce car tariffs from 110% to 10%. Although India accounts for only 1.5% of euro exports, trade with this country is expected to grow by about 6.5% per year through 2030.

In summary, even though the euro has strength, the Japanese yen is stronger right now, so EUR/JPY will continue to face downward pressure.