EUR/JPY Slides Amid Bearish Bias and Stagflation Fears

The EUR/JPY currency cross fell to around 182.10 on Thursday during Asian hours, marking its decline from recent highs. This move is part of a prevailing bearish bias in the market.

The EUR/JPY has been holding below both the nine-day and 50-day Exponential Moving Averages (EMAs), indicating that it remains under selling pressure. The Relative Strength Index (RSI) reading of around 37 suggests persistent downside momentum, but not extreme.

Looking ahead, analysts at BNY Mellon argue that recent data show 'growth defies gloom,' with Europe's latest PMIs surprising to the upside and pushing back against immediate stagflation fears. However, they caution that this resilience is not a clear invitation for the European Central Bank (ECB) to tighten monetary policy again.

According to strategists at BNY Mellon, another hike in interest rates by the ECB could risk turning a nascent recovery into a policy-induced slowdown for the Eurozone economy and regional assets.