Insights 
VT 
The EUR/JPY is experiencing lower trading levels amid renewed US–China trade tensions and mixed economic data from Japan. The pair is currently down 0.20% at 163.45, as markets adjust expectations around safe-haven demand for the Japanese Yen and Euro resilience linked to ECB and Bank of Japan policy differences.
Trade talks between the US and China, slated for Saturday in Switzerland, have been a key focus. Optimism was initially bolstered by the scheduled meeting, but comments from US President Donald Trump about an 80% tariff on China, a potential reduction from the current 145% rate, have tempered risk sentiment.
Isabel Schnabel’s Address
ECB Executive Board member Isabel Schnabel is delivering an address at the Hoover Institution’s monetary conference. Known for a hawkish stance, her comments are being monitored for possible insights into ECB policy, with markets anticipating a rate cut in June.
Japan’s economic indicators released Friday showed a mixed picture. The Coincident Index dropped to 116.0, while the Leading Economic Index reached 107.7, slightly above expectations but lower than the previous figure. These readings suggest the Bank of Japan may maintain its current monetary policy stance.
EUR/JPY is consolidating around 163.45, with upward momentum needing a sustained break above 163.94 for further gains. Support levels are identified, with the RSI indicating modest bullish momentum without overbought conditions.
The EUR/JPY’s current pullback to 163.45, down about 0.20%, reflects caution more than outright retreat. With traders weighing the prospect of cooling trade ties between the US and China, the Yen is seeing muted safe-haven inflows. At the same time, the Euro remains relatively supported—not because of stronger fundamentals, but more due to diverging expectations between European and Japanese central bank direction.
The market was initially hopeful following announcements about upcoming trade talks this weekend in Switzerland. However, remarks by Trump regarding an 80% tariff adjustment on Chinese goods—a decrease from 145%, yet still substantially high—shook confidence. Although he framed it as a potential decrease, the level remains harsh enough to imply continued pressure between the two economies. Risk appetite, particularly in Asia-linked pairs, ebbed quickly after those comments surfaced.
Technical Analysis Outlook
Schnabel has been flagged by markets in recent days. Her appearance at the Hoover Institution carried potential implications, especially given the proximity to June’s much-anticipated ECB meeting. Even a mild deviation from her typically hawkish tone would ripple through yield expectations across the eurozone. Comments suggesting more patience or policy flexibility could erode Euro support temporarily—something we’ve kept a close watch on. For now, pricing still leans toward a summer cut; however, traders may soon begin stressing over the ECB’s growth forecasts rather than just the rate path alone.
Meanwhile, economic figures in Japan are not moving the needle meaningfully. The drop in the Coincident Index hints at immediate softness in economic activity, while the Leading Index’s improvement—small though it may be—offers limited encouragement. On balance, the data doesn’t apply any strong pressure on the Bank of Japan to adjust policy in either direction. In markets like EUR/JPY, where interest rate differentials are a key driver, the BoJ holding its ground keeps the Yen on the defensive—unless outside risk factors flare.
From a technical standpoint, EUR/JPY is clinging close to support. The 163.45 level remains a short-term barometer—one we are monitoring for clues. There’s potential for a push higher, but that would require a confident move past 163.94. Until such a break occurs, price action is likely to remain sideways, possibly with a slight upward tilt. The RSI is indicating gentle momentum without the froth that might derail a rally. This suggests that any upside leg would likely be steady rather than sharp. Yet, without new policy cues or unexpected data surprises, gains might struggle to extend beyond the short-term resistance.
Given this backdrop, we’re preparing for a stretch of measured swings rather than abrupt moves.
