Snapshot: EUR/JPY is trading with a heavy bias as yesterday’s stable Eurozone wage tracker reinforces the ECB’s mild easing path from its current 2.50% deposit rate. This domestic softness stands in contrast to a Bank of Japan biased toward slow normalisation, with the broader downside on the cross further amplified by a steady retreat in US 10-year yields to 4.43%.
- Yesterday’s stable negotiated wage data gives ECB doves the ammunition they need to push for consecutive rate cuts later this year, keeping Euro upside structurally capped near recent cycle highs.
- Extreme Yen weakness past prior intervention zones dramatically raises the threat of unilateral MoF/BoJ policy action, making long EUR/JPY positioning highly asymmetric and vulnerable to a sharp squeeze ahead of the US 08:30 ET data.
Bias into NY: We hold a tactical bearish bias into the New York session, looking for a break below 169.20 toward 168.50, as cooling Eurozone wage dynamics and Japanese intervention fears prompt a timely liquidation of stretched carry longs.