- EUR/JPY is expected to decline after reaching a one-day peak of 172.28 on Wednesday.
- Due to rising trade anxieties, the Japanese yen is likely to benefit as a safe haven.
- Maros Sefcovic from the EU stated significant progress has been made toward a framework trade agreement with the US.
EUR/JPY has been weakening for the second consecutive session after peaking at a one-year high of 172.28 on Wednesday. Currently, it is trading around 171.40 during the Thursday Asian session.
The forecast indicates that EUR/JPY will decline as the Japanese yen gains strength from safe haven demand amidst escalating trade tensions. US President Trump announced a new series of tariffs on Wednesday, raising fears about a potential global trade war. These announced tariffs range from 20% to 50% across eight countries starting August 1. Additionally, a 50% tariff on copper imports to the US has also been revealed, set to take effect on the same date, according to Reuters.
Yet, the Japanese yen may face its own challenges, as trade discussions between the US and Japan have shown some tension, especially regarding protections for Japan’s market. This follows Trump’s announcement of a 25% tariff on Japanese goods coming on August 1.
Japan is actively pursuing ministerial-level tariff talks with the US ahead of the August 1 deadline. Meetings are being organized between chief negotiator Ryosei Akazawa and US Treasury Secretary Scott Bessent at the World’s Fair on July 19.
On Wednesday, EU trade chief Maros Sefcovic mentioned that “good progress” has been made toward a framework trade agreement with the US, indicating that an agreement might be on the horizon soon. He also stressed that the extended deadline offers more time for reaching a resolution. However, Italian Economy Minister Giancarlo Giorgetti cautioned that the negotiations will still be “very complicated” and may last until the very end.
