EUR/JPY trades with mild gains above 174.50 amid softer Japan Tokyo CPI data

• EUR/JPY strengthens to near 174.80 in Friday's early European session. 
• Slower-than-expected Tokyo CPI inflation prompted the expectations that the BoJ might delay rate hikes.
• Escalating geopolitical tensions could boost the safe-haven flows, capping the JPY's downside. 

The EUR/JPY cross trades in positive territory around 174.80 during the early European session on Friday. The Japanese Yen (JPY) softens against the Euro (EUR) after a slight moderation of consumer inflation in Tokyo. The European Central Bank (ECB) policymakers are scheduled to speak later on Friday, including Piero Cipollone and José Luis Escrivá.

Data released by the Statistics Bureau of Japan on Friday showed that the headline Tokyo Consumer Price Index (CPI) rose 2.5% year-on-year in September, compared to 2.6% in the previous month. Meanwhile, Tokyo CPI ex Fresh Food climbed 2.5% YoY in August against 2.8% expected and unchanged from August. The Tokyo CPI ex Fresh Food, Energy rose 2.5% YoY in September, versus 3.0% prior.

The moderation in inflation complicates the case for further interest rate hikes by the Bank of Japan (BoJ), even though price growth remains above its 2% target. Adding to this, concerns over political uncertainty in Japan ahead of the Liberal Democratic Party (LDP) leadership election scheduled for October 4 could allow the Bank of Japan (BoJ) to delay raising interest rates, which could exert some selling pressure on the JPY. 

On the other hand, persistent geopolitical tensions in Europe and the Middle East could weigh on the EUR due to Europe's close economic and energy ties with Russia. This could also boost the safe-haven flows, benefiting currencies like the JPY. 

On Thursday, Ukraine's President Zelensky warned that Russian President Vladimir Putin "will keep driving the war forward wider and deeper" if he is not stopped. Russian aerial attacks have become larger and more frequent since Moscow scaled up its drone production at the start of the year.  But while most of these assaults used to come at night, there have been more daytime threats in recent weeks.