EUR/JPY is attempting to stabilize after two consecutive sessions of losses, trading near the 181.90 area during Asian hours on Wednesday. The cross remains supported as the Japanese Yen (JPY) comes under mild pressure following the release of Japan’s adjusted merchandise trade balance for November, which posted a surplus of JPY 62.9 billion, narrowing from October’s JPY 74.0 billion.
That said, stronger-than-expected trade components continue to reinforce expectations that the Bank of Japan (BoJ) could proceed with a rate hike this week. Exports climbed 6.1% year-on-year in November, beating market forecasts of 4.8% and marking the fastest pace of growth in nine months. In addition, core machinery orders surged 7%, sharply outperforming expectations for a 2.3% contraction. Imports also rose by 1.3% from a year earlier, extending a third consecutive monthly increase, although the figure fell short of the 2.5% consensus estimate.
Despite these supportive signals, traders remain cautious and reluctant to commit to fresh positions ahead of key central bank risk. Market attention is firmly fixed on the two-day BoJ policy meeting, which concludes on Friday, as investors look for clearer guidance on the policy outlook through 2026. BoJ Governor Kazuo Ueda said last week that confidence in the central bank’s baseline economic and inflation outlook is gradually improving, adding that Japan is moving closer to sustainably achieving its inflation target.
On the European side, the Euro (EUR) may find renewed support against its major counterparts after investors scaled back expectations for further European Central Bank (ECB) easing, following comments from officials suggesting that additional rate cuts may not be necessary in 2026. In the near term, traders will keep a close eye on Germany’s IFO Business Survey, with the Eurozone core Harmonized Index of Consumer Prices (HICP) data also due later in the day, both of which could provide fresh direction for the single currency.
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