EUR/JPY weakens to near 162.00 amid dovish ECB, intervention fears

• EUR/JPY edges lower to near 162.15 in Monday’s early European session, down 0.20% on the day. 
• A dovish ECB could undermine the shared currency in the near term. 
• BOJ policymaker said the bank must scrutinize risks and avoid premature rate hikes. 

The EUR/JPY cross attracts some sellers to around 162.15 during the early European session on Monday. The dovish tone of the European Central Bank (ECB) officials continues to weigh on the Euro (EUR) against the Japanese Yen (JPY). Investors will focus on ECB President Christine Lagarde's speech on Tuesday for fresh catalysts. 

The rising speculation that the ECB may accelerate its pace of policy easing could exert some selling pressure on the EUR. The ECB lowered the deposit rate by a further 25 basis points (bps) at its October meeting. President Christine Lagarde said during the press conference that there is “probably” more downside than upside risk to the ECB’s inflation forecast. 

Lagarde added that the central bank will not pre-commit to any particular rate path and would analyze all available data between now and December before deciding the next steps. ECB policymaker Francois Villeroy de Galhau said on Saturday that the Euro-area consumer price growth probably will be at the ECB’s 2% target in early 2025, per Bloomberg.

On the other hand, the verbal intervention from Japanese authorities supports the JPY. On Friday, Japan's top currency diplomat, Atsushi Mimura, stated that the officials will monitor the foreign exchange moves with a high sense of urgency. 

Nonetheless, the uncertainty over the timing and pace of further rate hikes by the Bank of Japan (BoJ) should cap the upside for the JPY and create a tailwind for EUR/JPY. The BoJ policymaker Seiji Adachi said last week that the Japanese central bank must raise interest rates at a "very moderate" pace and avoid hiking prematurely.