EUR/JPY strengthens above 176.50 on ECB's cautious stance

• EUR/JPY trades in positive territory near 176.55 in Wednesday's early European session. 
• ECB policymakers signalled that the central bank would adopt a data-dependent policy.
• Japan's Katayama said authorities are closely monitoring FX volatility and cautioning against sharp, one-sided moves.

The EUR/JPY cross gains traction to around 176.55 during the early European session on Wednesday. The Euro (EUR) strengthens against the Japanese Yen (JPY) as traders expect the European Central Bank (ECB) to adopt a cautious stance in its upcoming policy meeting. The Eurozone September Retail Sales will be published later on Thursday. 

The ECB left its deposit rate unchanged at 2.0% for a third meeting last week. The central bank noted that the inflation outlook remains broadly stable, the economy continues to grow, and uncertainty persists. ECB President Christine Lagarde highlighted that the central bank is "in a good place" and further stated it will do whatever is needed to stay in such a favorable position. 

Meanwhile, ECB Governing Council member Joachim Nagel said on Monday that Eurozone economic data aren't diverging from the ECB's outlook, but policymakers are keeping their options open. ECB policymaker Francois Villeroy de Galhau noted that the central bank is in a good position after the October policy decision. 

On the other hand, verbal intervention from Japanese officials could provide some support to the JPY and act as a headwind for the cross. Japan's Finance Minister Satsuki Katayama said on Friday that it was "important for currencies to move in a stable manner, reflecting fundamentals." He further added that the government was "closely watching FX moves with a high sense of urgency."

The Bank of Japan (BoJ) minutes from its September meeting indicated rising support for another interest rate hike, though some members remain cautious due to Japan's long history with deflation. The JPY edges slightly higher after the release of the hawkish BoJ minutes.