The Eurozone is already preparing for the publication of important inflation data later this Thursday. Together these numbers are likely to have a major effect on currency trading dynamics. Eurostat, the statistical office of the European Union, is expected to release in the coming days the Core Harmonized Index of Consumer Prices (HICP). This index is the Federal Reserve’s favorite measure of inflation. EURJPY is now trading a little bit negative. This release comes at a challenging time considering the multifaceted economic pressures exerting unprecedented pressures on the currency markets.
The HICP provides insights into price changes within the European Monetary Union by tracking a representative basket of goods and services. This index is particularly important because it applies the same methodology across all Eurozone member states. This method guarantees that each country’s contribution to the index is appropriately weighted. Eurostat’s HICP is published monthly. This practice increases the transparency and reliability of the Central Valley’s economic data.
The HICP is a monthly household-level surveillance that investigates price changes. It measures the price change of a fixed set of goods this month versus last month and then releases that as a month-on-month (MoM) change. The most recent inflation number in the Eurozone was 0.4%. Analysts note that there is little agreement as to what the next inflation figure will be. This lack of consistency injects a lot of unpredictability into the market’s potential response.
The next release of Eurozone inflation figures is scheduled for Thursday, July 17, 2025, at 09:00. As always, this timely data will have a tremendous impact on the shape of upcoming economic forecasts. It will determine the monetary policy choices faced by the European Central Bank (ECB).
Yesterday, ECB policymaker Joachim Nagel broke ranks to warn against the rising protectionist tide. He reiterated a need for a “steady hand” to meet persistent threats of inflation. His cautious approach is indicative of the mood when it comes to economic stability amid rising and falling markets.
The Japanese Yen continues to strengthen on the back of increased domestic demand. Traders are on guard as the market approaches Japan’s Upper House election on Sunday, July 20, while Eurozone complications continue to unravel. That political event is adding to already high volatility in the currency markets, as investors wait and watch for signs of what may happen.
Not only that, Japan’s 10-year government bond yield has shot up to nearly 1.6% as of Wednesday, its highest point since late 2008. This increase is indicative of the changing investor sentiment and economic outlook in Japan. Together, these two changes will only deepen the effect on the EUR/JPY currency pair.
For traders, the EUR/JPY exchange rate is good for fast reactions to major economic news from both areas. Key notable events to watch are the Eurozone’s inflation numbers and Japan’s CPI release. Of course, economic indicators are probably the most misleading thing coming out of both economies. That said, traders are continuing to play defense and position themselves as new news comes in.