The EUR/JPY pair is currently trending positively around the 180.70 level, ending a three-day losing streak. This rebound is due to traders believing that the European Central Bank (ECB) might stop cutting rates. Additionally, a drop in demand for safe-haven assets is hurting the Yen, which helps boost the EUR/JPY as traders await inflation data from the Eurozone. The Harmonized Index of Consumer Prices (HICP) in the Eurozone is expected to rise by 2.1% year-on-year for November. Its core measure is projected to increase slightly from 2.4% in October to 2.5%. Higher-than-expected inflation figures from Germany support the idea that the ECB will keep its current policy, which is good news for the Euro and EUR/JPY.

Yen’s Relief Over Lower Safe-Haven Demand

The Yen is showing some relief due to lower demand for safe-haven assets. Additionally, the Bank of Japan’s (BoJ) potential response to this situation might prevent significant depreciation. Comments from Japanese officials regarding market volatility suggest that there could be intervention to stop the Yen from weakening too much, which could limit how high EUR/JPY can go. The Core HICP measures price changes in the European Monetary Union, excluding volatile items, giving valuable insights into inflation and spending habits. A high core HICP reading is generally positive for the Euro, while low readings might indicate problems. The next Core HICP reading is set to be released on December 2, 2025, with expectations at 2.5%. The EUR/JPY pair is showing some strength at around the 180.70 level, breaking a recent losing streak. Market sentiment suggests that the ECB is unlikely to continue cutting interest rates, which supports the Euro. Recent German inflation data, which came out higher than expected for November 2025, bolsters this view. All eyes are on the Eurozone’s HICP inflation data being released today, with a consensus forecast of 2.5% for the core reading. If the actual figure exceeds this expectation, it could further strengthen the Euro and reinforce the belief that the ECB will keep rates steady. One-month risk reversals for EUR/JPY have turned positive for the first time in six weeks, indicating that options traders are anticipating more upside.

Bank of Japan’s Plans to Normalize Policy

Meanwhile, the Japanese Yen is being kept in check by the Bank of Japan’s announcement about normalizing their policy. It’s important to consider recent warnings from the Finance Minister about rapid Yen weakness. Authorities had intervened multiple times in late 2022 to support the Yen, and the possibility of intervention could limit how high EUR/JPY can climb in the short term. Given these mixed factors, derivative traders might want to explore strategies that could benefit from potential volatility spikes. One option is to buy a short-dated straddle, which involves at-the-money call and put options. This strategy could capitalize on significant price movements in either direction after the inflation release. For those with a directional bias, if you believe the HICP data will exceed expectations, purchasing near-term EUR/JPY call options with a strike price around 181.50 could provide a low-risk way to profit from a potential rally. However, keep in mind that the premium paid for these options would be your maximum loss if the pair does not move higher or reverses. A key risk remains that Japanese officials might intervene to support the Yen, limiting any major gains. Create your live VT Markets account and start trading now.

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