The EUR/JPY pair made a strong comeback on Thursday, climbing to around 166.60 during European trading hours. The Euro (EUR) strengthened significantly after officials from the European Central Bank (ECB) suggested that the current monetary easing cycle may soon pause.
Euro Outperforms Other Major Currencies
According to the latest currency heat map, the Euro showed broad strength against most major currencies. It recorded the biggest gains against the US Dollar (USD), with a rise of 0.94%, reflecting strong market confidence in the Eurozone currency.
| Currency | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| EUR | 0.94% | – | 0.64% | 0.33% | 0.65% | 0.70% | 0.48% | -0.05% |
This surge was mainly driven by growing expectations that the ECB may halt further interest rate cuts, supported by a stable inflation outlook.
ECB Officials Signal Pause in Easing
In Brussels, ECB board member Isabel Schnabel stated that the current monetary policy cycle is nearing its end. She explained that medium-term inflation is stabilizing near the ECB’s target of 2%, predicting inflation at 1.9% in both 2026 and 2027. This reinforces market confidence that further rate cuts are unlikely in the near term.
Last week, ECB policymaker Madis Muller echoed similar views, saying he agreed with ECB President Christine Lagarde, who indicated the easing cycle is “almost finished.” The ECB recently cut rates by 25 basis points to 2%, marking its seventh consecutive cut.
Safe-Haven Demand Boosts Euro
Another key factor supporting the Euro is its growing role as a safe-haven currency. With uncertainties surrounding the US tariff policy, investors are increasingly turning to the Euro as a liquid alternative to the US Dollar.
Japanese Yen Remains Resilient
While the Euro has gained ground against the Yen, the Japanese Yen (JPY) has remained relatively strong compared to other currencies. This resilience is driven by expectations that the Bank of Japan (BoJ) may raise interest rates again if inflation remains near 2%.
BoJ Governor Kazuo Ueda has left the door open for possible monetary tightening later this year. Investors are closely watching the BoJ’s upcoming policy meeting on Tuesday, where interest rates are expected to stay at 0.5% for now.
Market Outlook
The currency markets remain focused on both the ECB’s inflation outlook and the BoJ’s policy moves. Any new updates on inflation, interest rates, or global trade tensions could influence the EUR/JPY pair further in the coming weeks.
