Ella 
In early European trading on Tuesday, EUR/JPY struggled, currently trading around 157.55, up 0.07% on the day. Market participants are digesting hawkish comments from Bank of Japan policymakers, and attention will be paid to Thursday’s European Central Bank interest rate decision.
According to a Reuters poll, most analysts expect the European Central Bank to hold interest rates steady at its September meeting on Thursday. Regarding last week’s data, Germany’s annual adjusted inflation rate in August was 6.4%, in line with market expectations. Core CPI remained unchanged at 6.1%. In addition, the Eurozone’s GDP grew by 0.1% in the second quarter, compared with the previous value of 0.3%, which was lower than market expectations of 0.3%. The lackluster data could persuade the ECB to abandon its hawkish stance at its next meeting.
On the other hand, Bank of Japan Governor Kazuo Ueda said in an interview on Monday that the central bank may abandon the negative interest rate policy when the inflation rate hits the 2% target, and there will be enough evidence by the end of the year to evaluate whether negative interest rates should be maintained.
Separately, Japanese Finance Minister Shuni Suzuki said on Tuesday that he hopes the Bank of Japan will implement appropriate monetary policies while taking into account economic, price and financial conditions and work with the government to achieve the inflation target. Nonetheless, hawkish comments from Japanese policymakers boosted the Japanese yen (JPY), limiting the upside for EUR/JPY.
Next, market participants will focus on the German ZEW survey due later in the day. Later in the week, the euro zone’s monthly industrial production rate for July is due to be released on Wednesday. On Thursday, the European Central Bank (ECB) will announce its interest rate decision. Japan’s monthly industrial production rate for July will be released on Thursday. Traders will digest this data and look for trading opportunities around the EUR/JPY cross.
