Euro Fails to Break Through 182.00 Against Yen Despite Upbeat German Factory Data

The Euro rebounded slightly against the Japanese Yen on Friday, but failed to surpass the 182.00 level. The EUR/JPY pair had suffered a significant sell-off in the previous two days, with a 500-pip drop, before trimming some losses.

Currency analysts attribute the sharp Yen rally to comments from Bank of Japan officials hinting at a steeper monetary tightening cycle over the coming months, rather than another FX intervention by Japanese authorities.

Despite this, strategists at OCBC caution against 'extrapolating the latest pace of JPY gains', noting that the combination of firmer BoJ expectations and softer UST yields has turned the near-term backdrop more supportive for JPY.

In Europe, data released by Destatis showed a 2.5% increase in July's Factory Orders, exceeding market expectations of a 0.3% rise. The main reason for the positive surprise was higher orders for large transport equipment, such as ships and trains, which rose 124.6% in July.

However, the figures concealed a 12.5% decline in orders for the key automotive industry, which might have tempered investors' enthusiasm about the headline figure.