EUR/JPY attracts some buyers above 167.00 ahead of German/Eurozone GDP data

• EUR/JPY gains traction around 167.20 in Tuesday’s early European session. 
• The advanced Gross Domestic Product (GDP) from Eurozone/Germany will be closely watched later on Tuesday. 
• The BoJ is anticipated to raise the interest rate by 10 bps at its upcoming meeting on Wednesday. 

The EUR/JPY cross recovers some lost ground near 167.20 during the early European session on Tuesday. The Japanese Yen (JPY) extends its decline for the second consecutive day, which provides some support to the cross. Traders will monitor the release of Gross Domestic Product (GDP) for the second quarter (Q2) from the Eurozone and Germany on Tuesday. On Wednesday, all eyes will be on the Bank of Japan’s (BoJ) policy meeting. 

The weaker German IFO survey results and softer economic data from the Eurozone last week fuelled speculation of another rate cut by the European Central Bank (ECB). ECB President Christine Lagarde highlighted during its latest press conference that the central bank will maintain a data-dependent approach, with September's rate cut still undecided.

Traders will take more cues from the GDP growth numbers later in the day, which might deliver crucial information for the ECB as officials look for signals on whether to resume interest-rate cuts in September. The German economy is estimated to grow 0.1% QoQ in Q2, while the Eurozone economy is projected to expand 0.2% QoQ in the same reporting period. In the case of the stronger-than-expected readings, this could lift the shared currency against the JPY. 

On the other hand, the growing speculation that the BoJ would hike the rate on Wednesday might boost the JPY and cap the upside for the cross. A Reuters poll of economists expects the Japanese central bank to raise rates by 10 basis points (bps) to 0.1% at its upcoming July meeting. 

Elsewhere, data released by the Statistics Bureau of Japan showed that the country's Unemployment Rate fell to 2.5% in June from 2.6% in May. This figure registered the first improvement in five months and came in above the market consensus of 2.6%.