• EUR/JPY edges lower around 182.60 on Thursday, down 0.14% on the day.
• Demand for safe-haven assets supports the Japanese Yen amid the Middle East war.
• Mixed Eurozone data and cautious ECB comments limit support for the Euro.

EUR/JPY edges lower around 182.60 on Thursday at the time of writing, down 0.14% on the day, as the pair remains under pressure while the Japanese Yen (JPY) benefits from renewed safe-haven demand amid geopolitical crisis.

The Japanese currency strengthens against several of its peers as the war in the Middle East intensifies. In this risk-averse environment, investors tend to turn to assets perceived as safer, which supports the JPY.

On the monetary policy front, Bank of Japan (BoJ) Governor Kazuo Ueda reaffirmed that the central bank could consider raising interest rates if economic and inflation conditions allow. However, markets widely expect the Japanese central bank to keep policy unchanged at its March meeting, given the economic uncertainty linked to geopolitical tensions and volatile energy prices.

In the Eurozone, macroeconomic data sends mixed signals for the economy. Eurozone Retail Sales declined by 0.1% MoM in January, surprising markets that had expected a 0.3% increase and pointing to softer household consumption at the start of the year. However, on a yearly basis, Retail Sales increased by 2%, above the 1.7% expected by analysts, suggesting that consumer spending remains relatively resilient despite the weaker monthly reading.

Regarding monetary policy, several European Central Bank (ECB) officials have called for caution. ECB Governing Council member and Bank of France Governor François Villeroy de Galhau stated that the central bank is closely monitoring developments in energy markets amid the Middle East conflict, while seeing no reason at present to raise interest rates.

At the same time, ECB policymaker Martins Kazaks said the central bank should “sit tight” given the uncertainty surrounding the conflict with Iran. Nevertheless, the recent surge in Oil and Gas prices has revived inflation concerns.