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EUR/JPY steadies after US data-driven Yen surge, but stays soft

The Yen backed off its 40-year lows after a weaker US employment report sparked a brief jump, while ECB policy expectations remain for only one more hike this year.

Reported · Written up by our desk · Major Pairs

EUR/JPY eased away from a session low on Friday, even as the euro posted gains versus the US dollar, according to FXStreet. The move followed a sudden yen surge near the start of the US session after a surprisingly weak US employment report.

FXStreet said the EUR/JPY cross recouped much of those earlier declines fairly quickly, with traders still wary of selling the yen after Japan and the United States conducted coordinated yen-buying intervention last Friday. The yen now sits well off the 40-year low it reached in July.

The euro area central bank is still viewed as cautious, FXStreet added after the ECB left interest rates unchanged at its latest meeting. Markets currently price in only one additional ECB rate hike before year-end, with a lower chance of a second increase.

FXStreet also pointed to Middle East risk around the Strait of Hormuz, citing reported claims that US and Israeli ships would be barred under a draft plan. It said higher and more uncertain crude prices would likely weigh on Japan's terms of trade, a factor that helped drive the yen’s earlier weakness, while near-term technical levels keep EUR/JPY capped under nearby resistance around 182.13 to 182.17.

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