- EUR/JPY continues its losing streak as BoJ Deputy Governor Shinichi Uchida’s remarks reinforced expectations of further rate hikes.
- BoJ’s Uchida stated that Japan’s underlying inflation is steadily rising toward the 2% target, strengthening the case for policy tightening.
- US President Trump reignited trade tensions with Europe, suggesting that “reciprocal” tariffs could be imposed as early as April.
EUR/JPY remains under pressure for the fourth consecutive day, trading around 155.30 during Asian hours on Friday. The currency cross continues to struggle following hawkish remarks from Bank of Japan (BoJ) Deputy Governor Shinichi Uchida, who stated that Japan’s underlying inflation is gradually rising toward the 2% target. His comments reinforced market expectations that the BoJ will proceed with rate hikes this year, countering the impact of softer-than-expected Tokyo Consumer Price Index (CPI) data.
The latest Tokyo CPI report showed a slowdown in inflation. Headline Tokyo CPI rose 2.9% YoY in February, down from 3.4% in January. Core CPI (excluding fresh food and energy) increased by 2.2% YoY, below January’s 2.5%. Tokyo CPI ex Fresh Food rose 2.2% YoY, missing expectations of 2.3% and declining from 2.5% in the previous month.
In addition to BoJ-driven JPY strength, risk-off market sentiment is further supporting the Japanese Yen’s safe-haven appeal. Investor caution deepened after US President Donald Trump reaffirmed that his proposed 25% tariffs on Mexican and Canadian goods will take effect on March 4, alongside a 10% duty on Chinese imports, citing concerns over drug trafficking into the US.
President Trump also reignited trade tensions with Europe, hinting that “reciprocal” tariffs targeting the European Union (EU) could come as early as April. In a press conference on Wednesday, he announced that 25% tariffs on “cars and other things” from the Eurozone would be imposed “very soon.” A European Commission (EC) spokesperson responded, stating, “The EU will react firmly and immediately against unjustified barriers to free and fair trade.”
A potential US-EU tariff war would pose significant risks to the already fragile Eurozone economy, which is struggling with weak demand. The growing uncertainty could weigh on the Euro (EUR), further pressuring the EUR/JPY cross.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Upside appears capped at 0.6300 on Trump's tariff fallout
AUD/USD struggles to build on the previous day's rebound and remains below the 0.6300 mark early Wednesday, anticipating US President Trump's tariffs announcement later in the day. However, buyers continue to draw support from China's stimulus optimism and RBA's prudence on the policy outlook.
USD/JPY holds losses below 150.00 as traders await Trump's tariffs
USD/JPY stays defensive below 150.00 in Wednesday's Asian trading as traders turn cautious ahead of Trump's reciprocal tariffs announcement. A cautious market mood and BoJ Ueda's comments underpin the Japanese Yen, keeping the pair under pressure amid a subdued US Dollar.
Gold price holds comfortably above $3,100 amid trade jitters
Gold price attracts some dip-buyers following the previous day's retracement slide from the record high amid persistent safe-haven demand, bolstered by worries about a tariff-driven global economic slowdown. Furthermore, Fed rate cut expectations and the lack of USD buying interest offer additional support to the XAU/USD.
Solana traders risk $120 reversal as FTX begins $800M repayments on May 30
Solana’s price remained pinned below $130 on Tuesday, despite a broader market recovery. While Bitcoin, Ripple, and Cardano posted gains exceeding 3% over the past 24 hours, SOL lagged behind.
Is the US economy headed for a recession?
Leading economists say a recession is more likely than originally expected. With new tariffs set to be launched on April 2, investors and economists are growing more concerned about an economic slowdown or recession.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.