Euro Holds Gains At One-Month Highs Near 186.00 Despite Japanese Yen’s Strength

• EUR/JPY holds above previous tops at 182.80 after hitting one-month highs at 186.00.

• Hawkish comments by ECB speakers boosted support for the Euro on Wednesday.

• In Japan, doubts about the government's plan to repatriate pension fund investments hurt the Yen earlier this week.

The Euro (EUR) trades practically flat, just below one-month highs at 186.00 against the Japanese Yen (JPY) on Thursday, consolidating gains after rallying about 0.8% so far this week. Doubts about Tokyo’s plans to repatriate pension fund investments and hawkish comments by Eurozone Central Bank (ECB) officials have boosted the EUR/JPY over the previous three days.

The Japanese currency is showing some strength on Thursday, but the Euro has proved more resilient amid the risk-off market mood. Investors have remained cautious amid the resumption of hostilities in Iran, and the 15% rally in Oil prices that threatens both the Eurozone and the Japanese economies.

ECB tightening hopes are supporting the Euro

In Europe, data has not been particularly Euro-supportive, as Industrial Production contracted against expectations in May. Eurozone Central Bank (ECB) policymakers, however,  have maintained their hawkish stance, fuelling hopes that the central bank will hike rates later this year, and underpinning support to the Euro

The Austrian Central Bank Governor and ECB board member Marin Kocher said on Wednesday that he does not see second-round inflationary effects as of now, but that the bank is “ready to act” should that be necessary. At a later time, also on Wednesday, the Bundesbank President and also ECB member Joachim Nagel reiterated that, from the monetary policy perspective, it remains advisable to “act decisively” if needed.

The Yen, on the other hand, has remained vulnerable this week, after a Reuters report suggested that the Japanese Government does not have a specific plan to repatriate investments from the Government Pension Investment Fund (GPIF). The initiative, announced by the Finance Ministry last week, triggered a positive near-term reaction on the Yen, but traders have gradually resumed their JPY-selling positions as they realised that it might take months, if not years, for those plans to come into action.