The EUR/JPY cross drifts lower toward the 183.50 area, trading around 183.65 during early European hours on Monday. The pair comes under pressure as the Japanese Yen strengthens on rising geopolitical tensions linked to the escalating crisis in Venezuela. Market participants are also awaiting the release of the Eurozone Sentix Investor Confidence survey later in the session for fresh directional cues.
Over the weekend, the US Army’s elite Delta Force reportedly carried out an operation in Venezuela, capturing President Nicolás Maduro and his wife. Adding to market unease, US President Donald Trump warned early Monday that Washington could pursue a second military intervention if Venezuela’s interim president, Delcy Rodríguez, fails to meet US demands. These developments have heightened global risk aversion, boosting demand for traditional safe-haven currencies such as the Japanese Yen and weighing on EUR/JPY.
BoJ caution may limit yen gains
Despite the risk-driven support for the Yen, the Bank of Japan’s cautious approach to further policy normalization could cap its upside. The BoJ has refrained from signaling a clear timeline for additional rate hikes, with most economists expecting the next move to be delayed until the second half of 2026, potentially around October. This uncertainty limits the scope for sustained JPY appreciation.
ECB stance offers some support to the euro
On the Euro side, the European Central Bank kept interest rates unchanged at its December policy meeting and signaled reduced urgency for further easing. ECB President Christine Lagarde emphasized that all policy options remain open, noting that no discussion of rate hikes or cuts took place at the meeting. Some economists now expect ECB rates to remain on hold through 2026, a factor that could provide a degree of underlying support to the Euro and help cushion further losses in the cross.
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