Euro firms against yen, flat vs dollar ahead of central bank meetings

The euro edged higher against the Japanese yen and was little changed against the US dollar on Monday, October 26, according to a Reuters report by Stefano Rebaudo. The single currency drew support from lower oil prices and from France keeping its credit rating unchanged. Both factors eased some of the pressure that had been weighing on the euro going into a week crowded with central bank announcements.

According to Reuters, the euro was flat against the dollar at $1.1201. Against the yen it was up 0.37% at 176.15. The Japanese yen, which is often treated as a safe-haven currency, fell 0.25% to 157.28 per dollar. The euro's gain against the yen therefore came alongside a weaker yen against the dollar, while the euro and dollar barely moved against each other.

Oil prices were a central theme. Reuters reported that Brent crude futures eased but remained near six-month highs. High oil prices tend to weigh on import-dependent economies such as the euro zone, because energy costs feed into inflation and can weaken growth. That is why a pullback in crude, even a modest one, was seen as taking some pressure off the euro.

French credit worries have been a recurring theme for the euro in recent sessions. Reuters noted that the rating being left unchanged also helped reduce pressure on the currency. The report did not describe the rating decision in more detail.

The broader backdrop is a week of policy decisions. Reuters said five major central banks will announce decisions later in the week. The US Federal Reserve, the European Central Bank and the Bank of Japan are all expected to keep interest rates steady despite inflation pressures. The report said they are expected to leave the door ajar for rate hikes in December. Separate market coverage from FXStreet noted that the Fed raised rates by 25 basis points in September. It also said the Bank of Japan had delivered a cumulative 50 basis points of tightening earlier this year, as an energy shock linked to the Middle East added to inflation pressures.

The report also quoted a market observer saying the euro/dollar premium has now corrected to below 3%, with possibly more unwinding still to come. The excerpt does not say which measure that premium refers to, so it is best read as an analyst's view of how the euro's recent valuation gap has narrowed.

Reuters said investors will focus on any clues about the rate outlook. It added that a potential AI-driven selloff in US stocks could tilt the Fed towards a more dovish stance. In other words, weakness in equity markets could change how policymakers weigh inflation risks against financial stability. That would in turn affect expectations for interest rate differentials, which are a key driver of currency pairs such as EUR/USD and USD/JPY.

For currency markets, the immediate picture is one of cautious positioning. Moves on Monday were small. The dollar was steady against the euro, and the yen moved only modestly. Traders appear to be waiting for the actual wording of the central banks' statements and press conferences rather than acting on expectations alone. Anything in the language about inflation, energy prices or the timing of future rate moves could shift sentiment. Market conditions can change quickly, and nothing in the report implies a particular direction for prices. This article is for information only and is not investment advice.

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This is a news summary for general information only — not financial advice, and nothing here is a recommendation to buy or sell any currency or metal. Exchange rates and gold prices can move sharply around data releases and central-bank decisions, and trading them carries a real risk of loss, which leverage magnifies. Always verify against the original source and do your own research before making a financial decision.