EUR/JPY edged higher on Friday, recovering from earlier losses as the Japanese Yen struggles to draw support from rising expectations of a potential Bank of Japan (BoJ) rate hike. The pair currently trades near 180.77, after bouncing from an intraday low of 180.10. Despite the recovery, price action has remained largely range-bound within the familiar levels seen since mid-November.
The Euro received an additional lift from stronger economic data in the Eurozone. According to Eurostat, third-quarter GDP expanded 0.3% QoQ, outperforming forecasts of 0.2% and matching the 0.2% increase seen in Q2. On a yearly basis, growth came in at 1.4% YoY, in line with market expectations.
Underlying data signaled a broadly improving economic landscape. Household spending increased 0.2%, government expenditure rose 0.7%, and investment climbed 0.9%. External sector performance also improved, with exports up 0.7% and imports gaining 1.3%.
Labor conditions across the bloc were also constructive. Employment rose 0.2% QoQ, exceeding the expected 0.1% increase and outperforming the previous quarter’s result. Yearly employment growth held steady at 0.6%, matching estimates.
Meanwhile, the Japanese Yen failed to capitalize on stronger expectations that the BoJ may raise interest rates at its December 18–19 policy meeting. Recent hawkish remarks from BoJ Governor Kazuo Ueda strengthened the narrative of an upcoming policy shift.
Bloomberg reported that BoJ policymakers are prepared to lift interest rates this month, provided there are no significant shocks to economic or financial conditions. Officials are also expected to communicate readiness for further tightening if the economic outlook progresses as anticipated, although the pace and extent of rate hikes remain uncertain.
Looking ahead, the market will turn its focus to new Japanese macroeconomic updates scheduled for Monday, including labor earnings, the current account balance, and the final reading of third-quarter GDP. These indicators are likely to shape expectations for the BoJ’s next steps as the December meeting approaches.
