EUR/JPY traded around 187.20 during the Asian hours on Monday, maintaining stability after modest gains the previous day, despite the release of disappointing German ZEW Survey data [1]. The German ZEW Survey - Economic Sentiment index plunged to -17.2 in April, significantly below the forecast of -5 and down from -0.5 in March. The Current Situation index also deteriorated sharply to -73.7, missing estimates of -70.0 and declining from -62.9 previously. Additionally, the Eurozone ZEW Economic Sentiment index weakened markedly, falling to -20.4 versus expectations of -3.6 [1].
European Central Bank (ECB) Vice President Luis de Guindos highlighted private credit as a key risk to financial stability, alongside elevated market valuations and loose fiscal policy in some countries, according to Reuters [1]. Despite the negative sentiment reflected in the ZEW data, EUR/JPY remained resilient, with the Euro moving little following the survey's release [1].
The Japanese Yen (JPY) could remain under pressure amid uncertainty over the Bank of Japan (BoJ) policy outlook. The BoJ is expected to revise inflation forecasts higher while lowering growth projections, reflecting rising energy costs and broader headwinds stemming from the Iran conflict. According to Nikkei, the BoJ is expected to leave interest rates unchanged at 0.75% in its monetary policy announcement on April 28, while other reports suggest the central bank may signal a resumption of policy normalization as early as June [1].
The ZEW Economic Sentiment index is a monthly indicator measuring institutional investor sentiment, with negative readings generally considered bearish for the EUR [1].
CONCLUSION
Despite a sharp deterioration in German and Eurozone ZEW Economic Sentiment indices, EUR/JPY remained steady above 187.00, reflecting resilience in the currency cross. Market participants are closely watching the BoJ's upcoming policy announcement and potential signals of normalization, which could further impact the Yen. The negative sentiment from the ZEW survey suggests caution for the Euro, but immediate market reaction has been muted.