Euro Pauses Near 12-Week High Against Yen Despite Upbeat PMI

The Euro has paused near its 12-week high against the Yen despite upbeat Eurozone PMI data. The EUR/JPY cross trades around 186.30 after reaching a 12-week high of 186.67 on Thursday.

The preliminary Eurozone HCOB Composite Purchasing Managers’ Index (PMI) rose to a five-month high of 51.9 in July, beating the market forecast of 50.2 and improving from 50.0 in June. The Services PMI climbed to a five-month high of 51.6 from 49.4, while the Manufacturing PMI increased to a three-month high of 52.0 from 51.4.

The stronger PMI figures reinforce signs of economic resilience despite heightened tensions in the Middle East, supporting expectations that the European Central Bank (ECB) can maintain a restrictive policy stance. ECB policymaker Gediminas Šimkus said on Friday that “inflation is seen higher than target for a long time” and that he still sees “the probability of a rate hike higher than a hold.”

Meanwhile, the Japanese Yen remains broadly weak, keeping traders alert to the risk of intervention as USD/JPY stays pinned at a 40-year high. Elevated Oil prices and Japan’s relatively low interest rates continue to weigh on the currency.