• During Wednesday’s Asian session, EUR/JPY is gaining momentum to around 164.35.
• The Japanese yen is weakening due to the BoJ’s indecision to boost interest rates.
• The ECB’s Kazaks said that the central bank should continue gradual reductions in interest rates.

In early Asian trading on Wednesday, the EUR/JPY rate rose to around 164.35. The Japanese yen (JPY) is weakening against the euro (EUR) amid uncertainty over the Bank of Japan (BoJ) interest rate hike. The most essential event on Thursday will be preliminary data on the euro zone’s gross domestic product (GDP) for the third quarter.

The BoJ’s summary of views suggested there was no clear direction on the timing of an interest rate hike as policymakers were divided on whether to raise interest rates. Additionally, political uncertainty in Japan has raised doubts about the ability of the Japanese central bank to further tighten monetary policy. This in turn weighs on JPY and acts as a tailwind for EUR/JPY.

On the euro, Martins Kazaks, member of the Governing Council of the European Central Bank (ECB), said on Tuesday that the central bank should continue to gradually cut interest rates. Meanwhile, ECB policymaker Olli Rehn said further monetary easing next month seemed likely as euro zone disinflation was “on track” and growth prospects “appear to be weakening.” However, officials should be careful and act step by step.

Markets have fully priced in another 25 basis point (bps) interest rate cut by the ECB at its last meeting of the year in December. The ECB deposit rate is currently 3.25%.