Insights 
VT 
The Euro has recovered some losses after French Prime Minister Sébastien Lecornu announced a suspension of the pension reform until after the presidential election in 2027. This decision is viewed as a peace offering to trade unions and opposition parties, calming concerns about political turmoil in France.
Impact of Political Moves
This move is expected to stabilise French politics and reduce the likelihood of an immediate government crisis. A no-confidence vote is scheduled for Thursday, but Lecornu’s decision has lowered the chances of its success, as it aligns with certain opposition demands.
Despite political changes in France, the Japanese Yen remains strong due to political issues and talks of Bank of Japan intervention. The ruling coalition’s collapse has affected the new LDP leader, resulting in concerns about rapid forex movements without central intervention.
The EUR/JPY pair remains volatile due to competing influences: France’s temporary policy relief and Japan’s ongoing political uncertainties. The strength of currencies like the Euro and Japanese Yen fluctuates based on these developments, seen in a heat map showing currency percentage changes. The Euro showed strength against the Australian Dollar, while the US Dollar remained stable.
The political news from Paris is giving the Euro a small breather as of October 14, 2025. Prime Minister Lecornu’s decision to pause the 2023 pension reform has temporarily calmed markets, which we see reflected in the spread between French and German 10-year bonds tightening by 5 basis points to 62 bps this morning. This move likely ensures the government survives Thursday’s no-confidence vote, removing a major short-term risk for the Euro.
Strategies for Traders
Meanwhile, the Japanese Yen remains the stronger currency, driven by political turmoil in Tokyo and the credible threat of intervention from the Bank of Japan. We saw similar warnings from officials back in late 2024 when the USD/JPY cross was nearing the 160 mark, and the market is now pricing in a higher chance of action. One-month implied volatility on JPY pairs has jumped to 12.5%, its highest level in three months, showing traders are preparing for a sudden move.
Given these opposing forces, we believe EUR/JPY is likely to be caught in a range, capped by resistance near the 50-day moving average around 176.50. For option traders, this could make selling short-dated strangles an appealing strategy to collect premium, though the high volatility adds risk. A decisive break below the 175.00 support level would indicate the Yen’s strength is overwhelming the temporary Euro relief.
In the coming weeks, traders should protect against downside risk in this pair. Buying puts on EUR/JPY or establishing put option spreads offers a defined-risk way to profit if Japanese political uncertainty escalates or if the BoJ intervenes to strengthen the Yen. We are treating the current stability from France as a temporary pause in a market that still favors a stronger Yen.
