EUR/JPY rises to near 163.30 ahead of Eurozone HICP data

• EUR/JPY gains ground as Japanese Yen struggles to maintain its strength.
• Japanese authorities could intervene in the markets to support the Yen.
• ECB’s Robert Holzmann would like to see more supportive data before initiating rate cuts in June.

EUR/JPY continues to advance for the second consecutive session, trading around 163.30 during the early European hours. Despite a modest uptick in the Japanese Yen (JPY) yesterday, it struggles to maintain its strength. Investors are cautious amid the possibility of Japanese authorities intervening in the markets to prevent a significant decline in the Yen.

This, coupled with a subdued risk sentiment, provides some support to the safe-haven JPY. However, the Bank of Japan's (BoJ) cautious stance on further policy tightening fails to inspire bullish sentiment or offer substantial momentum.

Japanese Finance Minister Shunichi Suzuki reiterated his caution regarding excessive exchange-rate volatility and reaffirmed authorities' readiness to take appropriate action. His remarks provided some backing to the Japanese Yen.

European Central Bank (ECB) policymaker Robert Holzmann stated in a Reuters interview on Wednesday, "I have no inherent objection to a rate cut in June, but I would like to see more supportive data before making a decision."

German inflation moderated slightly more than anticipated in March, reaching its lowest level in almost three years. The preliminary German Harmonized Index of Consumer Prices (HICP) increased by 0.6% month-on-month (MoM) in March, slightly below the forecasted 0.7% rise. The year-on-year rate of HICP climbed by 2.3%, falling short of the market consensus of 2.4%.

The softer inflation figures suggest that Germany edges closer to the European Central Bank's (ECB) target of 2%, leading to market expectations of a potential interest rate cut in the near future. Consequently, this exerts selling pressure on the Euro (EUR) and presents a headwind for the EUR/JPY cross. Investors are now awaiting the advanced Eurozone Harmonized Index of Consumer Prices data for March on Wednesday for further insights.