EUR/JPY softens below 1.1600 as the EU imposes new sanctions on Russia

• EUR/JPY drifts lower to around 1.1590 in Thursday's Asian session. 
• EU agrees on fresh Russia sanctions over the Ukraine war. 
• Analysts expect the BoJ will raise rates by early next year, though the timing remains uncertain.

The EUR/JPY cross loses ground to near 1.1590 during the Asian trading hours on Thursday. The Euro (EUR) weakens against the Japanese Yen (JPY) after the European Union (EU) agreed to impose new sanctions on Russia over the war in Ukraine. The preliminary reading of Eurozone Consumer Confidence for October is due later on Thursday.

The EU and the US on Wednesday imposed new sanctions against Russia, citing Moscow's lack of serious commitment to a peace process to end the war in Ukraine. The fresh sanctions were announced one day after plans for a summit between US President Donald Trump and Russian President Vladimir Putin were put on hold

The EU's decision to impose sanctions on Russia might boost the JPY and create a headwind for the cross, as traders factor in potential economic headwinds for the Eurozone region and shift toward safer assets amid rising geopolitical tensions.

Japan's new Prime Minister Sanae Takaichi is preparing a fresh economic stimulus package that is likely to exceed last year's $92 billion to help households tackle inflation. Traders expect expansionary fiscal policy and a looser Bank of Japan (BoJ) monetary policy would undermine the JPY. 

According to the majority of economists polled by Reuters, nearly 60% expect the BoJ to raise rates by 25 basis points (bps) this quarter. Nearly 96% of economists expect borrowing costs to increase at least 25 bps by the end of March.