EUR/JPY Drops to 182.40 as US Trade Policy Uncertainty Sparks Yen Safe‑Haven Flow
EUR/JPY plunged to 182.40 during early Asian trading (March 15, 2025), down roughly 0.8% in a single session, as rising uncertainty over US trade policy prompted a sharp risk-off move and boosted demand for the Japanese Yen. Traders cited pending US legislative reviews and possible tariff changes — including disputes over digital service taxes and semiconductor supply chains — as the primary catalyst. Technical levels to watch: resistance near 184.50, immediate support at 182.00, and a deeper support at 180.75 (2025 YTD low). Analysts note the move reflects capital flows into traditional havens rather than Japanese fundamentals; the Bank of Japan’s ultra‑accommodative policy has been overwhelmed by global risk aversion. Immediate market effects included weaker Asian equities (Nikkei drop), lower US Treasury yields, higher corporate hedging costs, potential carry-trade unwinds, and pressure on exporters’ earnings (European exporters to Japan). Traders should monitor statements from the US Trade Representative, US Commerce Department, ECB and BoJ commentary, and upcoming US trade and EU-Japan trade data. A sustained break below 182.00 could open a path toward the 180.00 handle. This development highlights how US policy signals can rapidly shift capital flows and exchange-rate risk, with implications for hedging, cross-border earnings, and short-term volatility in FX and equity markets.
Bearish
The news is categorized as bearish for risk assets and supportive for safe-haven currencies (like JPY). The sharp EUR/JPY drop reflects risk-off flows triggered by US trade policy uncertainty — a classic driver that strengthens safe-haven currencies and pressures risk-linked FX and equities. Historically, similar episodes (e.g., US-China trade tensions 2018–2020) led to Yen appreciation, unwind of carry trades, elevated FX volatility, and weaker export-reliant equity sectors. In the short term expect higher FX volatility, potential further EUR/JPY downside if 182.00 breaks, increased hedging demand, and pressure on export earnings and Asian equities. In the medium term the impact depends on policy clarity: if US trade signals stabilize, risk appetite may recover and reverse some Yen gains; if trade tensions persist or escalate, sustained Yen strength and broader risk-asset weakness could follow, raising funding costs for carry trades and keeping FX markets stressed.