EUR/JPY holds gains above 173.00 following Tokyo CPI data

• EUR/JPY remains stronger after the release of the Tokyo Consumer Price Index data on Friday.
• The headline Tokyo Consumer Price Index rose 2.9% year-over-year in July, against the 3.1% prior.
• The ECB stressed that more economic data is needed before it can offer clearer guidance on its policy outlook.

EUR/JPY extends its winning streak for the seventh successive session, trading around 173.10 during the Asian hours on Friday. The currency cross appreciates as the Japanese Yen (JPY) faces challenges following the release of Tokyo Consumer Price Index (CPI) data.

The Statistics Bureau of Japan showed the headline Tokyo Consumer Price Index for July climbed 2.9% year-over-year, as compared to 3.1% in the previous month. CPI ex Fresh Food climbed 2.9% YoY in July against 3.0% expected and down from 3.1% in the prior month. The CPI ex Fresh Food, Energy rose 2.9% YoY in July, compared to the previous reading of 3.1%.

However, Tokyo's core inflation for July came in slightly below expectations but stayed well above the Bank of Japan's (BoJ) 2% target, strengthening expectations for another rate hike later this year.

The European Central Bank (ECB) left interest rates unchanged on Thursday, stating that disinflation is progressing in line with its earlier projections. The interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility stood at 2.15%, 2.4% and 2%, respectively.

The ECB emphasized the need for additional data on economic developments before providing further clarity on its policy outlook, including factors such as a potential trade agreement with the United States (US). Markets scaled back expectations for rate cuts this year after ECB President Christine Lagarde indicated that such moves may not be warranted.