The EUR/JPY pair is holding above 170.00 as investors question the likelihood of further rate cuts by the ECB. Despite expectations for a rate cut in June, ECB policymakers are comfortable with market speculation. Wage growth data has increased, but ECB board members believe it is a lagging indicator. Investors are now looking towards the July meeting to see how the economy responds to any rate cuts before expecting further action.
On the other hand, the Japanese Yen is facing skepticism as investors doubt the Bank of Japan’s ability to tighten policy further. Inflation in Japan has decreased for the second consecutive month, although it remains above the 2% target. The government’s economic assessment report for May has maintained a neutral outlook for the third consecutive month.