EUR/JPY holds gains after mixed PMI data from Germany and Eurozone, trades above 165.00
- EUR/JPY received support after the release of moderate German PMI data on Tuesday.
- ECB Vice President Luis de Guindos announced that the central bank intends to reduce interest rates in June.
- The Japanese Yen faces obstacles as the BoJ indicated no rush to implement monetary policy measures.
EUR/JPY cross extends its winning streak for the third successive session, hovering around 165.20 during the European trading hours on Tuesday. The Euro gains ground on mixed Purchasing Managers Index (PMI) data from Germany and the Eurozone released on Tuesday.
In April, the initial Eurozone Manufacturing PMI dipped to 45.6, falling short of expectations for an increase to 46.5 from the previous 46.1. However, the Services PMI exhibited strength, reaching 52.9, surpassing the estimated 51.8 and the prior 51.5. The Composite PMI for April showed improvement with a reading of 51.4, exceeding both the previous 50.3 and the anticipated 50.8.
Earlier on Tuesday, the Euro advanced after the release of mixed German PMI data. April's preliminary German Manufacturing PMI rose to 42.2, slightly below the expected 42.8 but up from March's 41.9, marking a two-month high. Services PMI also saw significant improvement, reaching 53.3, surpassing the market's expectation of 50.6 and reaching a fresh ten-month high.
The Japanese Yen (JPY) is encountering hurdles stemming from the widening yield gap between Japan and numerous other key nations. This trend prompts traders to borrow JPY and allocate funds to higher-yielding assets abroad. The Bank of Japan (BoJ) signaled that it is taking a cautious approach regarding policy normalization, indicating no rush to implement such measures.
Furthermore, according to Reuters, Bank of Japan (BoJ) Governor Kazuo Ueda reiterated on Tuesday that the central bank stands ready to increase interest rates if trend inflation progresses towards its 2% target, aligning with its projections. Ueda also noted the challenge of predicting the optimal timeframe for the BoJ to accumulate adequate data before contemplating a policy adjustment.