EUR/JPY extends upside to near 167.50 despite strong Japanese CPI inflation data 

• EUR/JPY extends the rally to near 167.50 in Friday's early European session. 
• Akazawa said trade negotiations with the US "remained in a fog" despite efforts by both sides to seek the deal.
• Japan's annual National CPI remained well above the BoJ target of 2% in May.

The EUR/JPY cross attracts some buyers to around 167.50 during the early European session on Friday. The uncertainty over the timing of the next Bank of Japan (BoJ) rate hike weighs on the Japanese Yen (JPY). The Economic Bulletin and preliminary reading of Consumer Confidence from the Eurozone will be released later on Friday. 

BoJ Governor Kazuo Ueda said on Tuesday that the central bank's near-term attention was on downside risks to Japan's economy, with the impact of US tariffs expected to worsen in the second half of this year. This remark suggests that the Japanese central bank was in no hurry to begin rate hikes, which undermines the JPY and acts as a tailwind for the cross. 

Additionally, tariff uncertainty between the US and Japan might contribute to the JPY's downside. Japan's top trade negotiator Ryosei Akazawa said on Friday that Japan will not fixate on the looming date for so-called reciprocal tariffs to go back to higher levels. Akazawa further stated that trade negotiations with the US "remained in a fog" despite efforts by both sides to seek the deal.

The hawkish tone surrounding the European Central Bank's (ECB) policy outlook has lifted the shared currency. ECB President Christine Lagarde noted that rate reductions are coming to an end as the central bank is now "in a good position" to deal with prevailing uncertainties.

Data released by the Japan Statistics Bureau on Friday showed that the country's National Consumer Price Index (CPI) rose by 3.5% YoY in May, compared to the previous reading of 3.6%. Meanwhile, the National CPI ex Fresh food came in at 3.7% YoY in May versus 3.5% prior. The figure was above the market consensus of 3.6%. Finally, CPI ex Fresh Food, Energy rose 3.3% YoY in May, compared to the previous reading of 3.0%. This reading could provide some support to the JPY and cap the upside for the cross.