EUR/JPY attracts some sellers below 161.00 as BoJ's Ueda hawkish remarks boost the Japanese Yen

• EUR/JPY trades softer near 160.70 in Monday’s early European session, down 0.50% on the day. 
• BoJ’s hawkish remarks support the JPY and cap the upside for the cross.
• ECB’s Rehn said disinflation and a weak economy support the case for a September rate cut. 

The EUR/JPY cross trades in negative territory around 160.70 during the early European session on Monday. The hawkish comments from the Bank of Japan (BoJ) Governor Kazuo Ueda provide some support to the Japanese Yen (JPY) and weigh on the cross. The Eurozone's flash Harmonized Index of Consumer Prices (HICP) for August will take centre stage on Friday. 

The BoJ Governor Kazuo Ueda on Friday reaffirmed his resolve to raise interest rates if inflation stayed on course to sustainably hit the 2% target. A majority of economists expect the Japanese central bank to hike rates again this year, but more see the possibility of it occurring in December rather than October, according to the Reuters poll. The growing speculation of more rate hikes from the BoJ boosts the JPY against the Euro (EUR). 

On the Euro front, investors await its first estimate of inflation data for August, which might offer some hints about the European Central Bank (ECB) interest rate decision in September. Consensus suggests that inflation will cool down to 2.3% YoY in August, prompting expectations for the ECB to continue cutting interest rates for the remainder of the year. This, in turn, exerts some selling pressure on the shared currency. 

The ECB Governing Council member Olli Rehn said on Friday that the slowdown in inflation alongside weakness in the Eurozone economy strengthened arguments for cutting the borrowing costs next month.