EUR/JPY Slips Below 172.00 as EU-US Trade Tensions Weigh on Sentiment

EUR/JPY Slips Below 172.00 as EU-US Trade Tensions Weigh on Sentiment

The EUR/JPY currency pair has edged lower on Tuesday, trading just above the 172.00 support level, as investors react to escalating EU-US trade tensions and a loss of bullish momentum near recent highs. The Euro is under pressure, while the Japanese Yen is seeing renewed demand as a safe-haven asset.

Yen Finds Strength in Post-Election Clarity

Despite narrowly losing its upper-house majority, Japanese Prime Minister Shigeru Ishiba’s coalition is set to retain power with support from smaller fringe parties. The outcome brings political stability, which has been welcomed by markets, especially as low-tax opposition policies were averted.

Investors expect Ishiba to continue with trade negotiations ahead of the looming August 1 US tariff deadline, providing a supportive backdrop for the Yen.

EU-US Trade Friction Dims Euro Outlook

While Japan shores up internal support, the Euro faces pressure from rising uncertainty surrounding EU-US trade talks. With potential retaliatory tariffs on the table, traders are becoming more cautious ahead of the European Central Bank (ECB) policy decision later this week, which could further impact the Euro’s direction.

US-Japan Trade Talks in Spotlight

Japan’s chief trade negotiator Ryosei Akazawa is preparing for key meetings with US Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent. Tokyo is aiming to defuse tensions and avoid a threatened 25% US tariff on Japanese exports, which would affect nearly all major export categories.

Key Takeaways:

• EUR/JPY softens to just above 172.00, losing bullish momentum.
• Yen gains as Ishiba remains PM despite narrow election loss.
• EU-US trade concerns pressure the Euro ahead of ECB decision.
• Japan continues push to avoid US tariffs before August 1 deadline.

Suggested Internal Links for Tredu.com:

• What’s Next for EUR/JPY After Political Shifts in Japan?
• Will the ECB Hike or Hold? Euro Traders on Edge
• How Tariffs Are Driving Safe-Haven Demand in Forex
• Japan’s Strategy to Avoid US Trade Penalties