EUR/JPY trades with modest gains above 183.00 ahead of Eurozone CPI report

EUR/JPY gains some positive traction and snaps a three-day losing streak amid a weaker JPY.
The uncertainty over the timing of the next BoJ rate hike and a positive risk undermine the JPY.
Hawkish ECB bets and a softer USD benefit the EUR, lending additional support to spot prices.

Haresh Menghani FXStreet

The EUR/JPY cross attracts some buyers during the Asian session on Wednesday, and for now, seems to have snapped a three-day losing streak amid a broadly weaker Japanese Yen (JPY). Spot prices, however, remain close to a two-week low touched on Monday and currently trade around the 183.20 region, up less than 0.10% for the day.

Against the backdrop of Japan's fiscal concerns, the prevalent risk-on environment, and the uncertainty about the likely timing of the next interest rate hike by the Bank of Japan (BoJ), undermine the JPY and act as a tailwind for the EUR/JPY cross. The shared currency, on the other hand, draws some support from a softer US Dollar (USD) and the European Central Bank's (ECB) hawkish signal that there was no appetite at all to lower interest rates any further.

In fact, investors expect that a steady 2% deposit rate could be the most likely outcome for each of the ECB's eight meetings this year as economic growth in the Eurozone has been surprisingly robust throughout 2025. Moreover, inflation in Germany – the bloc's biggest economy – slowed more than expected, from 2.6% to 2% in December. The market focus now shifts to the release of the preliminary Eurozone consumer inflation figures, due later today.

Nevertheless, the fundamental backdrop backs the case for a further rise in the EUR/JPY cross. However, fears that government authorities would step in to stem any further JPY weakness warrant some caution for bullish traders. Adding to this, bets that the BoJ will stick to its policy normalization path make it prudent to wait for strong follow-through buying before confirming that the two-week-old corrective slide from the all-time peak has run its course.

Economic Indicator

Core Harmonized Index of Consumer Prices (YoY)

The Core Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, – released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Core HICP excludes volatile components like food, energy, alcohol, and tobacco. The Core HICP is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.

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