EUR/JPY rises ahead of Japan's CPI, German Retail Sales data

• EUR/JPY advances with Japan's inflation data in focus.
• Germany prepares for the release of Friday's Retail Sales data, which is due on Friday.
• Both data points may provide an additional catalyst as traders remain focused on the ECB and BoJ's next move

The Euro (EUR) is strengthening against the safe-haven Japanese Yen (JPY) on Thursday, ahead of Japan's upcoming inflation data and Germany's Retail Sales data. At the time of writing, the pair trades at 163.83, up 0.17% in the day.

The focus in Japan on Thursday is on the upcoming Tokyo Consumer Price Index (CPI) release at 23:30 GMT, which will shed light on the pace of inflation. In April, inflation rose to 3.5% YoY, above the Bank of Japan's (BoJ) 2% target. 

Meanwhile, CPI excluding Food and Energy came in at 2%. With the Bank of Japan recently adopting a more hawkish tone, a higher print may raise the potential for the BoJ to shift away from its accommodative monetary policy stance. 

In Europe, the release of Retail Sales data from Germany on Friday will likely provide an additional catalyst for the Euro. Europe's largest economy is expected to show that sales declined to 1.8% YoY in April, down from 2.2% in March.

If retail sales come in softer than expected, this may solidify expectations that the European Central Bank (ECB) will cut rates in June, with the potential for additional easing at the July meeting. Meanwhile, a Reuters poll recently revealed that 70% of economists anticipate that the European Central Bank will pause its easing cycle after June. If the data releases deviate from expectations, EUR/JPY may face additional pressure.