EUR/JPY Falls After ECB Holds Rates and Japan Signals Possible Intervention

ECB Policy Decision and Eurozone Data Weigh on Euro

The EUR/JPY retreated toward 183.60 after recently climbing above 187.50, as mixed signals from European policy and Japanese intervention risks pressured the pair. The European Central Bank left interest rates unchanged, keeping the main refinancing rate at 2.15%, the deposit rate at 2%, and the marginal lending facility at 2.4%.

The ECB noted that while economic data remains broadly aligned with expectations, risks to inflation have increased alongside downside risks to growth, largely driven by higher energy prices linked to geopolitical tensions. Inflation expectations remain anchored in the long term, though short-term pressures have risen.

In the Eurozone, Germany’s GDP grew 0.3% in the first quarter, beating forecasts, but unemployment rose to 6.4%. Inflation also accelerated, with HICP reaching 3% year-on-year.

Japan Intervention Warnings Support Yen

On the Japanese side, Finance Minister Satsuki Katayama warned that authorities may take action in currency markets as the yen weakens, particularly after USD/JPY crossed 160.00.

However, rising oil prices continue to pressure Japan’s economy, limiting the yen’s strength despite intervention rhetoric. Markets now await guidance from Christine Lagarde for further policy direction.