EUR/JPY prints 40-week high at 134.70 amid rising metal prices

• EUR/JPY has prints fresh 40-week high at 134.70 on broader underperformance of yen.
• The EU leaders summit ended without a material decision on the embargo on Russian oil.
• Rising commodity prices may intensify sell-off in Japanese yen.

The EUR/JPY pair has recorded a fresh 40-week high at 134.70 as rising metal prices are hurting the Japanese yen. The cross has witnessed a three-day winning streak and is hovering around Thursday’s high at 134.40. The asset is expected to extend its gains amid broader weakness in the Japanese yen.

Global metal prices are having a devastating impact on the Japanese yen. The currency has been depreciating after Russia’s invasion of Ukraine as the event has underpinned the oil and base metal prices. Japan, being a major importer of oil and metals is facing some serious cash outflows on galloping commodity prices, which eventually is widening the fiscal deficit of its economy.

Meanwhile, the shared currency is underpinned against the Japanese yen on a delay in confirmation of the embargo on Russian oil. The European Union (EU) leaders summit on Thursday remained unsettled on contrasting views from the EU members. Germany has denied an immediate ban on Russian oil amid its higher dependency. The former fetches more than 50% of its gas imports from Moscow and its immediate prohibition would lead to massive unemployment in its region. Belgium has favored Germany's claim and has warned about the devastating effect of the embargo on Russian oil overnight.

Going forward, the next round of the EU leaders summit on the embargo on Russian oil will remain the major driver. But before that, investors will focus on the Unemployment Rate by the Statistics Bureau of Japan, which is due next week.