Euro and Yen Gain Strength as Central Banks Diverge

The global currency landscape is shifting as central banks implement differing monetary policies, leading to gains for the euro and yen against the US dollar. According to Standard Chartered, the European Central Bank (ECB) and Bank of Japan (BOJ) will remain key drivers in the months ahead, with further tightening providing support for the euro and yen.

The ECB raised its benchmark interest rate by 25 basis points to 2.5% in line with expectations, while markets are pricing in another increase in December. The eurozone's consumer-price inflation accelerated to 3.3% in August, its highest level in nearly three years, driven by higher energy prices.

Standard Chartered sees gradually increasing upside risks for the euro against the dollar, with $1.18 emerging as a key resistance level. However, a sustained break above that threshold could be challenging, particularly if the Federal Reserve delivers a rate increase.