Anna 
The EUR/JPY cross is trading in negative territory after facing rejection from multi-month highs around 163.50 during early European trading on Tuesday. The Japanese Yen (JPY) gained support following hotter-than-expected Japanese Consumer Price Index (CPI) data, leading investors to reassess the likelihood of the Bank of Japan (BOJ) exiting its negative interest rate policy at the upcoming March meeting. As a result, the EUR/JPY cross is currently trading at 163.28, marking a 0.15% loss for the day.
Japanese government bond (JGB) yields edged higher on Tuesday, driven by the surprise upside in Japan’s inflation data. This development has fueled speculation that the BOJ might consider exiting negative interest rates by June this year, providing support to the Japanese Yen and acting as a headwind for the EUR/JPY cross.
The Japan Statistics Bureau reported that the National Consumer Price Index (CPI) for January came in at 2.2% year-on-year (YoY), down from 2.6% in December. Meanwhile, the National CPI excluding fresh food exceeded expectations, registering at 2.0% YoY in January compared to the 2.3% figure in the previous month.
On the European front, European Central Bank (ECB) President Christine Lagarde mentioned on Monday that inflation is gradually moving toward the central bank’s targets. However, she emphasized that the ECB remains committed to maintaining restrictive policy measures for the time being. Lagarde also noted that while fourth-quarter wage growth figures are positive, they are not sufficient to give the ECB confidence that inflation has been conquered.
Investors are likely to look for fresh impetus from upcoming economic data, including the German Consumer Price Index (CPI) and Eurozone Harmonized Index of Consumer Prices. Meanwhile, the Japanese docket includes the release of Industrial Production on Thursday and the Unemployment Rate on Friday.
