EUR/JPY recovery loses steam at 163.60 with all eyes on the ECB

• The Euro treads water above 16300 ahead of the ECB decision.
• Weak Eurozone GDP and inflation figures hint at further ECB cuts this year.
• BoJ Governour, Ueda, kept hopes of further tightening alive earlier this week.

The Euro keeps trading on a moderate positive bias on Thursday, fuelled by a positive surprise on Eurozone services PMI data, but remains trading within previous days' ranges, with investors awaiting the ECB's monetary policy decision.

The bank is widely expected to cut interest rates for the eighth consecutive time, bringing its benchmark rate to 2%, and President Lagarde will stick to her neutral "meeting by meeting" message, avoiding committing to any particular rate path.

ECB-BoJ monetary divergence might limit Euro rallies

After having slashed rates by 200 basis points in about one year, investors are pricing a pause in July. Longer-term, however, the soft Eurozone Economic growth and cooling inflation figures suggest that there is room for some more cuts later this year.

Eurozone Producer Prices Index has contracted at a faster-than-expected pace in May, -2.2% against expectations of a -1.8% monthly decline, following a 1.7% contraction in April. Darta, released on Tuesday, showed that consumer prices fell below the ECB's 2% target rate.

In Japan, recent comments by BoJ Governour Ueda keep hopes of further monetary tightening alive, which is keeping Yen's downside attempts limited.