Insights 
VT 
The EUR/JPY pair has risen by 0.45% to 162.60 in European trading, reaching a peak of 163.00. This surge coincides with eased trade tensions between the US and the EU, as a planned 50% tariff by President Trump has been postponed until July 9.
US-EU trade talks are set to continue following EU’s request for more time to formulate a favourable deal by July 9. President Ursula Von der Leyen expressed optimism over the discussions with Trump, emphasising the EU’s readiness to progress.
Impact Of Germany’s GDP Data
The Euro has gained further support from Germany’s Q1 GDP data, revised to show a 0.4% economic expansion, exceeding prior estimates of 0.2%. In contrast, the JPY is weakening, despite Japan reporting a faster-than-expected National CPI growth of 3.6% in April.
In local markets, the Japanese Yen has depreciated against major currencies, with its weakest performance against the New Zealand Dollar. The shift in CPI figures raises the prospect of a potential interest rate hike by the Bank of Japan in July.
The Euro is integral to the 19 countries in the Eurozone and is pivotal in trade balance and interest rates, as overseen by the ECB. Economic indicators such as GDP and inflation significantly impact its value.
Carrying on from the earlier developments, the EUR/JPY pair remains firmly in buyers’ hands, and the push towards 163.00 suggests market positioning continues to favour the Euro in the near term. The delay of a hefty import tariff by the U.S. administration until early July appears to have given markets some breathing room. For now, there’s relief in knowing the immediate disruption to transatlantic trade flows has been paused, though not cancelled altogether. Timing here matters. The new deadline provides just over a month of relative calm, which traders are already starting to price in.
Influence Of Trade Talks And Monetary Policies
Von der Leyen’s optimism has given the Euro some room to stretch, especially as her comments signal willingness from both parties to avoid escalation. What’s vital here is not just the language of cooperation, but the timeframe—markets dislike surprises, and a temporary delay hints at better odds for a negotiated outcome. Any signs that structured progress emerges from these trade discussions could extend the momentum.
Then we have Germany’s Q1 GDP figure, adjusted up to 0.4%. That alone provides a firm base under the currency. The difference between 0.2% and 0.4% growth may not seem vast on paper, but in current conditions, it’s double the earlier estimate. And considering how influential Germany is over policy within the ECB, stronger economic output could push conversations inside Frankfurt closer toward normalisation. That’s because when the largest economy in the bloc puts in a better performance, it reduces general hesitancy around tightening.
Meanwhile, contrary forces are shaping the Japanese Yen. April’s national inflation came in at 3.6%, which should logically support the currency. However, the JPY continues to slide. The reason isn’t the data in isolation, but market expectations – more specifically, anticipation of the Bank of Japan’s next move. Even with CPI above forecast, markets remain sceptical that the BoJ will tighten policy sharply or swiftly enough to close the yield gap with peers. Investors are watching July’s meeting, but unless Governor Ueda shifts tone or pace, interest rate differentials will continue pressuring the Yen across the board.
In the broader market, this Yen weakness isn’t confined to EUR/JPY. It’s appearing more strongly against higher-yielding currencies too, including the New Zealand Dollar. That’s a reflection of both carry flows and an ongoing narrative where the BoJ appears unwilling to remove accommodation as rapidly as others. It’s not only about inflation—it’s about credibility and the timing of forward guidance.
For derivative participants assessing current movements, there’s clear directionality, but it’s not one-dimensional. We need to consider how options volatility is responding to both the trade timeline and monetary policy expectations. Implieds on EUR/JPY have remained relatively stable, which points to the market pricing in a gradual continuation, not a sharp reversal. But hedging costs will increase if upside skews widen on renewed political headlines or ECB hawkish signals.
Positioning ahead of July may well continue to favour Euro longs over Yen, assuming no material changes from Ueda or an acceleration in European inflation. If rate hike speculation from the BoJ gains traction, short-dated expiries will react much faster than spot as traders readjust assumptions. As of now, though, the divergence story still holds and options flow is reflecting that. Some are favouring call spreads into next month, focusing on 163.50-165.00 strikes, which matches the recent technical structure.
We’re watching the intersection of macro data and event-driven decisions. It just happens to be compressed into a six-week window, and markets don’t operate on patience. With every data release or political comment, recalibration begins again. So traders with exposure tied to volatility or directional change should keep a tight lens on timing rather than just levels.
