EUR/JPY loses traction to near 176.50 despite ECB's cautious stance

• EUR/JPY softens to near 176.60 in Friday's Asian session.
• Minutes of the BoJ's September policy meeting kept hopes alive for an imminent rate hike. 
• ECB's Vujcic said the current policy is in a good place.

The EUR/JPY cross loses ground around 176.60 during the Asian session on Friday. The Japanese Yen (JPY) strengthens against the US Dollar on minutes of the Bank of Japan's (BoJ) September policy meeting and verbal intervention from Japanese officials.

Minutes from the Bank of Japan's (BoJ) September meeting revealed on Wednesday that an increasing number of policymakers at the central bank believed that conditions were falling into place for interest rates to rise, with two members calling for an immediate hike. The hawkish BoJ minutes may give some support to the JPY in the near future.

Some verbal intervention from Japanese officials could also lift the JPY against the EUR. Finance Minister Japan's Finance Minister Satsuki Katayama had escalated the verbal intervention last week, saying that officials were "monitoring foreign exchange movements with a high sense of urgency." 

On the other hand, the cautious stance from the European Central Bank might help limit the EUR's losses. 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. 

ECB Governing Council member Boris Vujcic stated that current policy is "in a good place" and that "we feel that we have done our job" after lowering inflation to the ECB's target. Traders see a less than 50% odds of further reductions by July 2026. A Morningstar analysis notes that swap markets are pricing in just a 25 basis point (bps) cut by September 2026.