The case for much lower levels is not strong unless we see some strong independent gains in the Yen on the back of a Bank of Japan policy shift. Otherwise, the narrative of a soft landing is a mildly positive one for the pro-cyclical EUR/JPY cross.

One left-field risk for the Euro is the focus on 2024 fiscal consolidation. Here eurozone finance ministers have faced criticism from the ECB that fiscal policy has been too loose for too long and fuelling inflation. Fiscal consolidation could rein in ECB tightening expectations and limit EUR upside in 2024.

The biggest risk for EUR/JPY is probably some emerging financial crisis from the shadow banking sector – in response to high rates.

EUR/JPY – 1M 153 3M 151 6M 150 12M 142