Euro Surges Against Yen as Rate Hike Expectations Soar

The Euro has gained ground against the Japanese Yen, with EUR/JPY trading around 181.70 on Monday, up 0.44% on the day. This move is attributed to increased expectations of a European Central Bank interest rate hike, with markets assigning a 90% chance of a rate increase at the September meeting.

Recent macroeconomic data has reinforced these expectations, with Eurozone inflation accelerating to 2.9% YoY in July and core inflation unexpectedly rising to 2.5% YoY. The Eurozone economy also expanded by 0.4% in the second quarter, twice as fast as consensus estimates.

The Japanese Yen remains under pressure despite last week's coordinated currency market intervention by Japanese and US authorities. Japan's Finance Minister Satsuki Katayama has reiterated that authorities stand ready to intervene again if necessary.