EUR/JPY hovers near 163.50 as traders adopt caution ahead of Eurozone HICP inflation data

• EUR/JPY holds ground ahead of the Eurozone Harmonized Index of Consumer Prices data release.
• BoJ Governor Kazuo Ueda expressed willingness to increase rates if economic and price momentum moves as expected.
• The European Commission stated that Trump's tariff decision undermines ongoing efforts to reach a deal and warned of potential "countermeasures."

EUR/JPY remains steady after registering gains in the previous day, trading around 163.30 during the Asian hours on Tuesday. Eurozone Harmonized Index of Consumer Prices (HICP) data, scheduled to be released later in the day, will be eyed.

The EUR/JPY cross maintains its position as the Japanese Yen (JPY) posted little losses despite the hawkish signals from the Bank of Japan (BoJ) Governor Kazuo Ueda, suggesting a willingness to increase interest rates if economic and price data move in line with forecasts.

Governor Ueda highlighted the importance that Japan's economy is undergoing a moderate recovery despite some weakness. Ueda also noted that corporate profits are improving, with business sentiment solid. "Will review bond taper plans at the next policy meeting, taking into account opinions of bond market participants," Ueda added.

The JPY also faced challenges as the US dollar recovers its ground on technical correction, despite growing concerns regarding stagflation in the United States (US). Traders adopt caution ahead of the implementation, on Wednesday, of the new "double import tariffs," increasing from 25% to 50%, on steel and aluminum.

The European Union (EU) expressed strong regret that Trump's plan to double US tariffs on steel and aluminum could derail bilateral trade negotiations. On Saturday, the European Commission (EC) noted that Trump's tariffs decision undermines ongoing efforts to reach a trade deal, warning about "countermeasures", per BBC.