Snapshot: Euro/Yen remains heavy as yesterday’s ECB wage tracker confirmed stable negotiated wage pressures for 2026, cementing the central bank’s mild easing bias. This domestic softening contrasts with a Bank of Japan aiming for slow policy normalisation from 0.50%, leaving the cross exposed to downside momentum ahead of the New York open.
- Policy Divergence: The ECB wage tracker validates the doves’ case for follow-up cuts to the 2.50% Deposit Rate, systematically stripping hawkish premium out of the Euro.
- Intervention Risk: With the Yen trading near critical intervention zones, any sudden spike in the VIX (currently 16.41) or a deterioration in broader risk appetite during the NY session at 08:30 ET will likely trigger sharp short-covering in the JPY.
Bias into NY: We hold a short bias on Euro/Yen targeting a move toward 168.20, as the ECB’s soft wage data leaves the single currency structurally vulnerable while MoF intervention threats cap any JPY weakness.