EUR/JPY holds below the 157.60 area and lacks follow-through.
Analysts expect the ECB to keep interest rates steady at its September policy meeting on Thursday.
BoJ Governor said the central bank may abandon its negative interest rate policy when its 2% inflation objective is achieved.
The EUR/JPY cross struggles to find a direction during the early European session on Tuesday. The cross currently trades around 157.55, up 0.07% for the day. Market players digest the hawkish remarks from the Japanese policymakers and the European Central Bank (ECB) interest rate decision on Thursday will be the spotlight.
The majority of analysts expect the ECB to keep interest rates steady at its September policy meeting on Thursday, according to Reuters polls. About last week’s data, the German Harmonised Consumer Price Index (HICP) for August came in at 6.4% YoY, as the market expected whereas the core CPI remains unchanged at 6.1%. Additionally, the Eurozone Gross Domestic Product (GDP) for the second quarter (Q2) rose 0.1% versus 0.3% prior, below market expectation of 0.3%. The discouraging data might convince the European Central Bank (ECB) to abandon its hawkish stance for the upcoming meeting.
On the other hand, BoJ Governor Kazuo Ueda stated on Monday in an interview that the central bank could exit its negative interest rate policy when its inflation target of 2% is near and they would have sufficient evidence by the end of the year to evaluate whether interest rates should stay negative.
Furthermore, Japan’s Finance Minister Shunichi Suzuki said on Tuesday that he expects the Bank of Japan to conduct appropriate monetary policy and collaborate with the government to attain the inflation target while taking the economy, prices, and financial conditions into consideration. That said, the hawkish comments from the Japanese policymakers boost the Japanese Yen (JPY) and limit the upside in the EUR/JPY cross.
Moving on, market players will monitor the German ZEW Survey due later in the day. Later this week, the Eurozone Industrial Production MoM for July will be released on Wednesday. On Thursday, the European Central Bank (ECB) will announce its interest rate decision. Japanese Industrial Production for July will be revealed on Thursday. Traders will digest these figures to find trading opportunities around the EUR/JPY cross
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