EUR/JPY remains steady after the release of the softer inflation data on Friday.
The Tokyo CPI increased by 2.2% YoY in July, slightly down from the previous 2.3% rise.
The Euro may face challenges as the ECB remains uncertain about its policy outlook.
EUR/JPY hovers around 167.00 with a positive bias during the Asian session on Friday. The EUR/JPY cross holds mild gains after the Statistics Bureau of Japan released the Tokyo Consumer Price Index (CPI) data on Friday.
The headline Tokyo CPI for July increased by 2.2% year-over-year, slightly down from the previous 2.3% rise. The Tokyo CPI excluding Fresh Food and Energy went up by 1.5% YoY, compared to the earlier increase of 1.8%. Moreover, the CPI excluding Fresh Food also rose by 2.2% in July, matching market expectations.
However, the EUR/JPY cross may limit its upside as the Japanese Yen may receive support as traders potentially unwind their carry trades ahead of the Bank of Japan's two-day policy meeting, concluding on Wednesday. The BoJ is expected to raise interest rates, which causes short-sellers to close their positions and bolster the JPY. Additionally, the BoJ is widely anticipated to outline plans to taper its bond purchases to reduce massive monetary stimulus.
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