• Risk aversion, fueled by sharp global equity sell-offs, supported the Japanese Yen.
• Mixed Eurozone data limits the appeal of the common currency.
• The BoJ’s cautious Minutes limit the JPY upside despite official warnings about excessive weakness.

EUR/JPY stabilizes around 176.50 on Wednesday at the time of writing, up 0.10% for the day, after hitting a two-week low at 175.70 earlier in the day. The pair dipped amid broad risk-off sentiment, as investors flocked to safe-haven assets such as the Japanese Yen (JPY) at the expense of higher-yielding currencies.

Global equity markets are under heavy pressure, driven by concerns over economic growth and US trade policy. This cautious tone is boosting demand for the JPY as a safe haven, limiting the Euro’s (EUR) ability to benefit from slightly stronger-than-expected economic data.

Data released on Wednesday showed that activity in the services sector accelerated in both the Eurozone and Germany. The Eurozone’s HCOB Services Purchasing Managers’ Index (PMI) rose to 53 in October from 51.3 the previous month, surpassing the preliminary estimate of 52.6. In Germany, the index climbed to 54.6, marking its highest level in over a year. However, the Eurozone Producer Price Index (PPI) declined by 0.1% MoM and 0.2% YoY, highlighting weak inflationary pressures and weighing on the common currency.

In Japan, the Minutes of the October meeting of the Bank of Japan (BoJ) confirmed the board’s cautious stance on further policy tightening, as several members warned that additional rate hikes could threaten an economy already under pressure from US tariffs. Meanwhile, Japan’s top currency diplomat, Atsushi Mimura, warned that the recent Japanese Yen moves deviate from fundamentals, hinting at possible interventions as the USD/JPY pair trades near levels that triggered BoJ action in 2022 and 2024.