EUR/JPY holds losses near 170.00 after BoJ policy, German HICP data awaited

EUR/JPY continues its losing streak for the fourth consecutive day, trading around 169.90 during the Asian session on Thursday. The currency cross loses ground following the release of the Bank of Japan’s (BoJ) interest rate decision. Traders will likely observe the largest economy in the Eurozone, Germany’s Consumer Price Index (CPI) and Harmonized Index of Consumer Prices (HICP) data due on Thursday.

The BoJ board members maintained the short-term interest rate target in the range of 0.40%- 0.50% on Thursday, as expected. The Japanese central bank extended the pause into the fourth consecutive meeting after having hiked the interest rate by 25 basis points (bps) to 0.50% in January.

The BoJ’s quarterly Outlook Report indicated that underlying inflation is likely to stall due to slowing economic growth but is expected to gradually accelerate thereafter. Uncertainty remains high regarding trade policy developments and their potential impact on the economy. The Bank will continue to raise the policy rate if economic conditions and prices evolve in line with its forecasts.

The Eurozone economy grew a modest 0.1% in Q2, slowing sharply from 0.6% in Q1 but still exceeding expectations of no growth. Traders express caution that the recently announced United States (US)-European Union (EU) trade agreement disproportionately benefits the US. Market expectations for ECB rate cuts have been delayed, with markets now assigning a 90% probability of a 25bps cut by March 2026.