Ella 
EUR/JPY ended lower for the sixth day in a row, trading around 156.90 during early European trade on Monday. However, EUR/JPY pared intraday losses following the release of Eurozone Producer Price Index (PPI) and German Purchasing Managers Index (PMI) data.
The HCOB Eurozone Composite Purchasing Managers’ Index (PMI) rose to 50.2 in July, slightly above expectations of 50.1. Germany’s composite PMI came in at 49.1, above expectations and the previous reading of 48.7. The services PMI came in at 52.5, above expectations and the previous reading of 52.0.
In Europe, traders expect the European Central Bank (ECB) to cut interest rates at least two more times in 2024, with the next likely coming in September. According to Reuters, ECB policymaker Yannis Stournaras mentioned in an interview on Thursday that a weak euro zone economy could push inflation below the ECB’s 2% target. That reinforces his forecast for two rate cuts this year.
The yen has risen as expectations of further tightening of monetary policy by the Bank of Japan (BOJ) have increased, which may provide continued support for the yen in the short term.
Minutes of the Bank of Japan’s June meeting showed that some members expressed concern that the recent fall in the yen had led to higher import prices, which could pose upward risks to inflation. One member emphasized that if cost-push inflation leads to rising inflation expectations and rising wages, it may intensify potential inflation.
Additionally, safe-haven flows have provided support for the yen while putting downward pressure on the EUR/JPY cross, a trend that may be linked to rising geopolitical tensions in the Middle East. Israeli airstrikes on two schools on Sunday caused at least 30 casualties, Reuters reported. Additionally, U.S. Secretary of State Tony Blinken hinted that Iran and Hezbollah may be preparing to launch an attack on Israel as soon as Monday, Axios reported.
