EUR/JPY Climbs as Markets Await Japan’s CPI and Germany’s Retail Sales Figures

The Euro (EUR) strengthened against the Japanese Yen (JPY) on Thursday, with traders eyeing Japan’s forthcoming inflation data and Germany’s Retail Sales figures due on Friday. As of now, the EUR/JPY pair is trading at 163.83, marking a daily increase of 0.17%. These key economic releases are poised to provide fresh impetus for the currency pair, as market participants closely monitor the next moves from the European Central Bank (ECB) and the Bank of Japan (BoJ).

In Japan, attention is centered on the Tokyo Consumer Price Index (CPI) data, set for release at 23:30 GMT. This report will offer insights into the country’s inflationary trends. In April, Japan’s headline inflation reached 3.5% year-over-year, surpassing the BoJ’s 2% target, while core CPI, excluding food and energy, stood at 2%. With the BoJ recently signaling a more hawkish stance, a stronger-than-expected CPI could bolster expectations for a shift away from its long-standing accommodative policy.

In Europe, Germany’s Retail Sales data, due on Friday, is anticipated to shape the Euro’s trajectory. Forecasts suggest a decline in sales to 1.8% year-over-year for April, down from 2.2% in March, reflecting challenges in Europe’s largest economy. A weaker-than-expected reading could reinforce expectations of an ECB interest rate cut in June, with potential for further easing in July. However, a recent Reuters poll indicated that 70% of economists expect the ECB to pause its rate-cutting cycle after June. Should either data release diverge from forecasts, EUR/JPY could experience heightened volatility.