EUR/JPY strives to break 166.00 decisively on upbeat Eurozone, German GDP data

• EUR/JPY sees more upside above 166.00 as upbeat Eurozone Q3 flash GDP has improved the Euro's outlook.
• The German economy returns to growth, surprisingly rose by 0.2% in the third quarter of the year.
• Investors await the BoJ meeting to get cues about Yen's outlook.

The EUR/JPY pair aims for a sustainable break above 166.00 in Wednesday's European session. The cross strives to gain further as the Euro's (EUR) outlook has improved after a slew of economic data from the Eurozone and its major regions.

The Eurozone flash Gross Domestic Product (GDP) data shows that the economy expanded by 0.9% year-on-year in the third quarter of the year, faster than estimates of 0.8% and the 0.6% growth in the April-June period. Quarterly GDP growth was 0.4%, double the estimates and the former release of 0.2%.

Meanwhile, the return of the German economy to growth after a contraction in the second quarter has also strengthened the Euro. The German economy unexpectedly grew by 0.2% while economists estimated a steady decline of 0.1%. Also, flash Harmonized Index of Consumer Prices in six German states has come in hotter-than-expected, prompting traders to pare European Central Bank (ECB) dovish bets for the December meeting.

According to market expectations, the probability of the ECB reducing its Deposit Facility Rate by 50 basis points (bps) in December has eased to 22% from 45% after the GDP and inflation data release.

On the Tokyo front, investors await the Bank of Japan's (BoJ) policy meeting on Thursday. The BoJ is expected to leave interest rates unchanged at 0.25%. Lately, the Japanese Yen (JPY) has remained under pressure due to market expectations of BoJ's incapability to hike interest rates further as traders doubt economic sustainability after the Liberal Democratic Party (LDP) failed to gain a majority in national elections.

Signs of hawkish interest rate guidance would prompt a strong recovery in the Japanese Yen, while the downside would be limited if the BoJ remains dependent on incoming data.