The EUR/JPY pair is rising after three days of losses, trading around 183.60 during Asian business hours on Monday. Diplomats said the currency pair was receiving support as the euro received support after European Union ambassadors agreed on Sunday to step up efforts to dissuade US President Donald Trump from imposing tariffs on European allies, while preparing for retaliation if the tariffs persist.
US President Donald Trump said on Saturday that he would impose customs duties on eight European countries that oppose his proposal to acquire Greenland. Trump has stated that a 10% tariff will be imposed on goods from EU members Denmark, Sweden, France, Germany, the Netherlands and Finland, as well as Britain and Norway, starting February 1, until the US is allowed to purchase Greenland, according to Bloomberg.
Japanese industrial production fell 2.7% month-on-month in November 2025, slightly worse than the initial estimate of 2.6%, reversing October’s 1.5% gain and representing the largest decline since January 2024.
The upside in EUR/JPY may be capped as the Japanese Yen (JPY) gets support from interest rate hike expectations from the Bank of Japan (BoJ) and prospects of increased fiscal spending under Prime Minister Sanae Takaishi.
However, the Bank of Japan is widely expected to keep interest rates at 0.75% this week, although markets are monitoring the possibility of a move in June. Last week, Bank of Japan Governor Kazuo Ueda reiterated that the central bank remains ready to raise interest rates if economic developments and prices develop in line with his expectations.
Japanese Finance Minister Satsuki Katayama indicated the possibility of coordinated intervention with the United States to support the weak currency. On Friday, Katayama reiterated that all options remain on the table, including direct market intervention, to address the recent decline in the value of the Japanese yen.
Frequently asked questions about definitions
Tariffs are customs duties imposed on imports of a specific good or category of products. Tariffs are designed to help domestic producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as protectionist tools, along with trade barriers and import quotas.
Although tariffs and taxes generate government revenue to finance public goods and services, they have many differences. Tariffs are paid in advance at the port of entry, while taxes are payable upon purchase. Taxes are imposed on individual and corporate taxpayers, while importers pay tariffs.
There are two schools of thought among economists regarding the use of definitions. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could drive up prices in the long run and lead to a destructive trade war by encouraging tit-for-tat tariffs.
During the run-up to the November 2024 presidential election, Donald Trump made clear that he intended to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada account for 42% of total US imports. During this period, Mexico emerged as the largest exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three countries when imposing tariffs. He also plans to use revenue generated by the tariffs to reduce personal income taxes.
