• EUR/JPY rebounds from the intraday low of 161.20 and recovers its entire intraday losses.
• BoJ Ueda leaned towards more interest rate hikes this year, given that price pressures remain steady.
• The ECB is expected to deliver two more interest rate cuts this year.

The EUR/JPY recovers its entire intraday losses and moves to near 162.50 in Friday’s European session. The cross fell earlier after hawkish guidance from Bank of Japan (BoJ) Governor Kazuo Ueda strengthened the Japanese Yen (JPY).

Kazuo Ueda said during a parliamentary hearing that short-term interest rates would need to be raised again if inflationary pressures remain steady. Market participants are also anticipating that the BoJ will tighten its monetary policy further, given the strong Japan’s economic outlook and price pressures well above the bank’s target of 2%.

Meanwhile, Japan’s National Consumer Price Index (CPI), excluding fresh food, grew expectedly in July. The data released in Friday’s Asian session showed that the underlying inflation rose by 2.7%, as expected, from 2.6% in June.

On the Eurozone front, growing speculation of more interest rate cuts by the European Central Bank (ECB) this year could weigh on the Euro (EUR). The ECB is widely anticipated to resume its policy-easing cycle again in September and deliver one more interest rate cut in the last quarter of this year. Market expectations for ECB rate cuts have been prompted by the Eurozone’s uncertain economic outlook and slowing wage pressures.