Ella 
During early European trading on Tuesday, the EUR/JPY cross attracted some buyers and rose to around 165.75. The euro (EUR) rose as recent euro zone economic data reduced expectations for a significant interest rate cut by the European Central Bank (ECB) in December.
Stronger-than-expected euro zone gross domestic product (GDP) data prompted traders to reduce their support for a larger interest rate cut at the December policy meeting. Money markets are now pricing interest rates down to 34 basis points, down from a 42 basis point cut the previous day.
ECB executive board member Isabel Schnabel said last week that “gradual” monetary easing was still appropriate, while Bundesbank President Joachim Nagel said, Officials must not rush into further rate cuts. Traders will get more clues from the euro zone’s November inflation report, which could provide some hints on the pace and scale of rate cuts by the European Central Bank.
The pair’s upside may be limited as uncertainty over the U.S. presidential election and ongoing geopolitical tensions in the Middle East have fueled gains for safe-haven assets such as the Japanese yen (JPY).
The upside in the EUR/JPY cross may be limited as safe-haven assets such as the Japanese yen (JPY) receive a boost from uncertainty over the US presidential election and ongoing geopolitical tensions in the Middle East.
In addition, less dovish comments from Bank of Japan Governor Kazuo Ueda may boost the yen in the short term. Bank of Japan Ueda said last week that Japan faces less risks from the United States and the global economy, suggesting the BOJ is closer to additional interest rate hikes, possibly in the coming months.
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