Snapshot: EUR/JPY remains heavily anchored as yesterday’s ECB wage tracker confirmed stable negotiated wage pressures, reinforcing the central bank’s cautious easing bias following April’s 25bp cut to 2.50%. This domestic wage print dampens immediate Euro upside, while the Yen is supported on the margins by the Bank of Japan’s slow-but-steady normalization bias at 0.50%. The cross lacks a clear directional catalyst as a result, with both central banks in wait-and-see modes.
- Negotiated wage stability in the Eurozone cements the ECB’s meeting-by-meeting flexibility, capping EUR/JPY upside as the doves build their case for another rate cut if services HICP cools.
- Verbal intervention risk from the MoF and BoJ remains high, meaning any speculative push to new lows in the Yen will face stiff official resistance.
Bias into NY: We lean slightly bearish on the cross today, looking for a drift toward 168.20 as US 10-year real yields drop 1.0bp to 2.14%, dragging the USD broad index down 0.51% and offering the Yen some passive cross-driven support.