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Euro slips versus yen as risk-off mood offsets hotter German inflation
EUR/JPY failed to hold above 184.00 after Germany’s July HICP accelerated to 2.8% year over year, with energy inflation jumping to 7.3%.
The euro was easing against the Japanese yen on Wednesday, with EUR/JPY backing away after failing to gain acceptance above 184.00 despite stronger German inflation data earlier in the day, according to FXStreet.
Germany’s July Harmonised Index of Consumer Prices accelerated to 2.8% year over year from 2.4% in June, driven by energy inflation rising to 7.3% from 2.7%. The measure excluding food and energy also increased to 2.6% year over year from 2.5% in June, reinforcing expectations for a European Central Bank interest rate hike in September, though FXStreet said the immediate euro impact was marginal.
FXStreet also pointed to a mild risk-off mood as reports of attacks on vessels attempting to cross the Straits of Hormuz and Bab el-Mandeb cast additional doubt on the US-Iran peace process, pushing out hopes for a swift reopening of the Strait of Hormuz.
Against that backdrop, the yen was trimming losses broadly after a Bank of Japan Summary of Opinions leaned hawkish, and DBS Group Research said there are growing reasons for the BoJ to bring forward its tightening cycle, citing firm wage-driven reflation and strengthening CPI. The same note added that faster policy normalization may be needed to address persistent yen weakness.