EUR/JPY moves little after registering gains in the previous session, trading around 176.20 during the Asian hours on Wednesday. The pair steadies as traders adopt caution ahead of a series of speeches from European Central Bank (ECB) officials this week for clues on the policy outlook.
The ECB will enter its pre-meeting blackout period on Thursday ahead of next week’s policy decision. Traders have increased bets on monetary easing, fully pricing in a 25-basis-point rate cut by July 2026.
The EUR/JPY cross may face challenges as the Japanese Yen (JPY) advances following the release of Japan’s Merchandise Trade Balance Total data. Japan’s Ministry of Finance reported a trade deficit of JPY 234.6 billion in September, narrowing slightly from August’s deficit of JPY 242.8 billion (revised from -242.5) but falling short of market expectations for a JPY 22.0 billion surplus.
Japan’s Exports rose 4.2% year-on-year, the first increase since April, though slightly below the projected 4.6% gain. Meanwhile, Imports jumped 3.3% to an eight-month high, marking their first rise in three months and exceeding forecasts for a modest 0.6% increase.
Traders remain cautious after dovish Sanae Takaichi was elected as Japan’s first female Prime Minister on Tuesday. Takaichi vowed to strengthen the nation’s economy and defense capabilities, as well as enhance relations with the US. Her victory came after the ruling Liberal Democratic Party (LDP) allied with the Japan Innovation Party and reportedly signed an agreement over the weekend to form a coalition government.