The euro has undergone a healthy correction after overly crowded long positioning earlier in July, especially following the US-EU trade agreement. However, with the ECB expected to remain cautious, only one additional cut now priced for 2025, and the eurozone showing signs of resilience (energy prices stabilizing, moderate inflation outlook), EUR still holds a constructive macro backdrop.

In contrast, the yen continues to weaken due to the BoJ's overly cautious stance, even after signing a $550B US-Japan trade agreement. Political uncertainty around LDP leadership and Governor Ueda’s reluctance to signal further hikes have kept USD/JPY elevated.

Japan’s inflation forecast upgrades were marginal at best, and there is a growing disconnect between policy rhetoric and inflation data. As long as BoJ underdelivers and the Fed stays sidelined, EUR/JPY remains a candidate for tactical long exposure.

LONG EURJPY

2025年8月4日