The EUR/JPY pair reached near 157.00 as the Japanese Yen weakened following the release of Tokyo’s soft CPI data. February’s Tokyo headline CPI dropped to 2.9% from 3.4% in January, with core CPI rising by 2.2%, below expectations.

Despite potential tariff issues posed by US trade policies, the Euro has maintained strength against its peers. In Germany, HICP rose by 2.8%, exceeding the anticipated 2.7%, suggesting further ECB easing may still occur.

The EUR/JPY pair has recovered from a seven-month low, but the outlook remains bearish, with bearish momentum conditions noted. A movement above 157.30 could lead to further gains towards 158.00, while dropping below 154.80 may expose lower support levels.

The Japanese Yen is influenced by the Bank of Japan’s monetary policy and international bond yield differentials. Historically, the BoJ’s loose policies have led to Yen depreciation, but recent policy shifts have bolstered its value amid changing global interest rates. The Yen is also perceived as a safe haven during market uncertainties.

With the Japanese Yen weakening on the back of softer-than-expected Tokyo CPI data, we have seen the EUR/JPY pair push towards the 157.00 mark. February’s headline figure came in lower at 2.9%, down from January’s 3.4%, and while core inflation rose by 2.2%, it still missed estimates. With signs of slowing inflation in Japan’s capital, traders are likely considering the extent to which the Bank of Japan will maintain its cautious approach to policy adjustments.

Despite uncertainties around trade policies, the Euro remains relatively firm. In Germany, the latest HICP measure advanced to 2.8%, edging past the forecast of 2.7%. This keeps the discussion open on the European Central Bank’s next steps. Even though price growth has slowed, inflation remains above target, so policymakers may continue evaluating rate adjustments rather than rushing into cuts.

Right now, the EUR/JPY pair is recovering from its seven-month low, but overall conditions still lean towards a bearish view. If buyers manage to clear 157.30 with conviction, the door opens for a move towards 158.00. On the other hand, losing ground at 154.80 could bring deeper selling pressure, potentially exposing further downside levels.

The fate of the Yen isn’t just tied to the domestic inflation story. Japan’s currency has long been sensitive to the gap between global bond yields and the BoJ’s stance. Historically, ultra-loose policy from Tokyo has led to depreciation, as low yields drive investors towards higher-return assets elsewhere. However, recent tweaks in monetary settings have provided some support, particularly as global interest rates shift. The Yen also tends to attract demand when external risks rise, as it is often seen as a defensive asset in times of uncertainty.

Traders should remain attentive to interest rate expectations on both sides, as well as upcoming economic releases that could shake up sentiment. Keeping an eye on liquidity and price momentum will be important when determining whether near-term moves have strength or are likely to fade.