- EUR/JPY climbs to around 157.10 in Monday’s early European session, adding 0.71% on the day.
- The conservatives won the German election, supporting the Euro.
- Rising BoJ rate hike bets might help limit the JPY’s losses.
The EUR/JPY cross rebounds to near 157.10, snapping the three-day losing streak during the early European session on Monday. The Euro (EUR) gathers strength as Germany’s conservatives won its election as expected. Traders brace for further results from the German election for fresh impetus.
Preliminary results showed the conservative Christian Democratic Union (CDU), led by chancellor candidate Friedrich Merz, and its allied Christian Social Union (CSU) won the election. The far-right Alternative for Germany (AfD) party came second, scoring between 19 and 20% of the vote, according to exit polls. The attention now is how soon the conservative Christian Democrats could form a coalition government to offer much-needed reform to a struggling economy.
On the other hand, data released last week showed that Japan’s core inflation touched a 19-month high in January, supporting the case of the Bank of Japan (BoJ) rate hike. BoJ Governor Kazuo Ueda said the BOJ could raise its short-term policy rate further “if the inflation outlook continues to improve,” adding that underlying inflation was still below its 2% target. The rising speculation that the Japanese central bank might continue raising interest rates might lift the Japanese Yen (JPY) and create a headwind for EUR/JPY.
