Ahead of Eurozone inflation data, some buyers are drawn to the EUR/JPY above 160.50

The EUR/JPY pair continues its upward trend, approaching 160.70 during the early European session on Tuesday. The Japanese Yen (JPY) is pressured by comments from Japan's incoming Prime Minister, Shigeru Ishiba. Meanwhile, investors are looking forward to the Eurozone Harmonized Index of Consumer Prices (HICP) for September, which could provide fresh momentum. Additionally, European Central Bank (ECB) policymakers Luis de Guindos and Isabel Schnabel are scheduled to speak later today.

Ishiba's dovish remarks indicate that the Bank of Japan (BoJ) should maintain an accommodative monetary policy to support the country's fragile economic recovery, contributing to selling pressure on the JPY.

In other news, Japan's Tankan Large Manufacturing Index revealed that business conditions for large manufacturers remained stable in the third quarter (Q3) of 2024. The sentiment index for large manufacturers held steady at 13.0 in Q3, unchanged from Q2 and in line with expectations.

On the Eurozone side, disappointing German CPI inflation data has led to growing speculation of a 25 basis point (bps) rate cut at the upcoming ECB policy meeting in October. This expectation may limit the upside potential for the euro. ECB President Christine Lagarde indicated on Monday that the central bank is becoming more confident in its ability to bring inflation down to the 2% target, suggesting that this will be reflected in the next policy decision. Following Lagarde's comments, market expectations for a reduction in borrowing costs at the October meeting have intensified.

Paraphrasing text from "FX Street" all rights reserved by the original author.