EUR/JPY trades around 169.50, just shy of 11-month highs

• EUR/JPY maintains its position near an 11-month high of 169.72, reached on Monday.
• The Japanese Yen gains ground due to hopes of further rate hikes by the BoJ in the coming month.
• ECB's Villeroy noted that the central bank may cut interest rates.

EUR/JPY remains steady after registering over 0.50% losses in the previous session, trading around 169.30 during the Asian hours on Thursday. However, the currency cross faced challenges as the Japanese Yen (JPY) received support as traders still expect further rate hikes by the Bank of Japan (BoJ) in the coming month.

Latest data showed that Japan's core inflation climbed to a more than two-year high in May and remained above the central bank's 2% target, along with the better-than-expected Japan's PMI, keeping the door open for rate hikes.

However, the BoJ's summary indicated that many policymakers called for keeping interest rates unchanged for some time amid uncertainty over the impact of US tariffs on Japan's economy. Many members also suggested that the effects of US tariff policies are yet to materialize, and the impact will certainly exert downward pressure on firms' sentiment.

On Thursday, Japan's top trade negotiator, Ryosei Akazawa, noted that Japan cannot accept 25% auto tariffs. Akazawa also said that officials will continue tariff talks with the United States (US).

European Central Bank (ECB) policymaker Francois Villeroy de Galhau said, on Tuesday, that the central bank could still cut interest rates despite the volatility seen in the Oil market. "If we look at the present assessment of markets so far, inflation expectations remain moderate," Villeroy added.

Meanwhile, ECB chief economist Philip Lane said that "Our monetary policy will have to take into account not only the most likely path (the baseline) but also the risks to activity and inflation," per Reuters.