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• EUR/JPY remains stable after data showed the German economy expanded by 0.2% QoQ in Q1.
• German Retail Sales rose 2.2% year-over-year in March, easing from a 4.3% increase in February.
• Japan’s Retail Sales climbed 3.1% YoY in March, marking the 36th consecutive month of growth.

EUR/JPY halts its two-day losing streak, trading around 162.40 during the European session on Wednesday. The currency cross holds ground following the release of key economic data from Germany.

The preliminary data from Destatis showed Germany’s economy grew 0.2% quarter-over-quarter in Q1 2025, in line with expectations, following a 0.2% contraction in Q4 2024. However, the annual GDP declined by 0.2%, matching the previous quarter’s reading and market forecasts.

Germany’s Retail Sales increased 2.2% year-over-year in March, slowing from February’s 4.3% rise. The seasonally adjusted unemployment rate held steady at 6.3% in April—its highest since September 2020—meeting expectations. Traders now turn their attention to the upcoming releases of Germany’s CPI and the Eurozone GDP later in the day.

The EUR/JPY cross finds support as the Japanese Yen (JPY) continues to weaken, pressured by disappointing domestic economic data. Japan’s industrial production fell 1.1% month-over-month in March, reversing February’s 2.3% gain and missing expectations of a 0.4% decline. This marks the second monthly contraction in 2025, raising concerns over the economic impact of potential US tariffs.

Japan’s Retail Sales rose 3.1% year-over-year in March, slightly below the forecast of 3.5%, but extended expansion streak to 36 consecutive months. Despite support from rising wages, the slower pace suggests emerging headwinds to consumer spending.

Additionally, the Japanese Yen remains under pressure amid reduced demand for safe-haven assets, as optimism over US-China trade relations grows. US President Donald Trump signaled readiness to ease tariffs on Chinese goods, while Beijing offered exemptions for select US imports previously hit with high duties.

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