EUR/JPY trades above 177.00 near fresh all-time highs

• EUR/JPY reached 177.46, an all-time high, following Japan's weaker wage data.
• Japan's Labor Cash Earnings increased 1.5% YoY in August, slowing from July's 3.4% rise.
• France's political challenges deepen as Prime Minister Sebastien Lecornu's resignation threatens the country's 2026 fiscal budget.

EUR/JPY gains ground for the fourth successive session, trading around 177.20 during the Asian hours on Wednesday. The currency cross reached 177.46, an all-time high, as the Japanese Yen (JPY) lost ground on softer-than-expected wage data, which dampened prospects for Bank of Japan (BoJ) rate hikes.

Japan's Labor Cash Earnings rose 1.5% year-on-year in August, easing from July's 3.4% gain and falling short of market expectations of a 2.6% increase. Meanwhile, real wages fell 1.4% from a year earlier, marking the eighth consecutive monthly drop as inflation continued to outstrip wage growth.

Market sentiment in Japan is concerned that the incoming Prime Minister, Sanae Takaichi, may adopt a more expansionary fiscal policy, potentially complicating the BoJ policy challenges. Additionally, Takuji Aida, widely regarded as one of Takaichi's closest economic advisers, stated that it would be premature for the BoJ to raise interest rates this month.

Japan's ruling Liberal Democratic Party (LDP) postponed initiating the extraordinary Diet session to October 20 or later. The delay follows Tuesday's failed talks between new LDP leader Sanae Takaichi and Komeito chief Tetsuo Saito on maintaining their long-standing governing partnership and shows political uncertainty in Japan as efforts to renew its coalition with Komeito remain stalled.

The upside of the EUR/JPY cross could be restrained as the Euro (EUR) struggles amid rising political issues in France, the second-largest economy in the Eurozone. The resignation of France's Prime Minister, Sebastien Lecornu, puts the country's 2026 fiscal budget at risk, as political turmoil continues to hinder efforts to stabilize public finances.