Snapshot: EUR/JPY price action remains capped as this morning’s ECB wage tracker showed stable negotiated wage pressures, reinforcing the central bank’s mild easing bias following its April cut to 2.50%. The release defuses immediate hawkish Eurozone bets, leaving today’s market focus on ECB President Lagarde’s address at 12:50 CET. Any dovish rhetoric from Lagarde regarding core inflation could accelerate near-term selling pressure.
- The stable wage print limits the Euro’s yield advantage, especially with the Bank of Japan retaining its slow normalization bias and looking to hike its 0.50% policy rate if wage growth consolidates.
- For the New York session, monitor broader risk sentiment; while WTI crude at $95/bbl acts as a persistent inflationary backdrop, a slide in the VIX below 16.0 could prompt a minor unwinding of yen shorts.
Bias into NY: We hold a defensive bias into the New York session, targeting a move down toward 168.80 as the lack of a hawkish domestic catalyst leaves the Euro vulnerable to position-squaring.