EUR/JPY Fails to Break Above 184.00 Amid Risk-Off Mood and German Inflation Data

The Euro (EUR) has retreated from its previous gains against the Japanese Yen (JPY), weighed down by a risk-off market mood amid growing tensions in the Middle East. Despite hot German inflation data released earlier, which showed July's Harmonized Index of Consumer Prices (HICP) accelerated to 2.8% year-over-year, the EUR/JPY pair struggled to break above 184.00 and instead fell back to 183.50.

The German inflation figures, particularly energy inflation jumping to 7.3%, cemented hopes for a European Central Bank (ECB) interest rate hike in September. However, this has had little impact on the Euro's value against the Yen.

Meanwhile, the Japanese Yen is gaining some support from the Bank of Japan's (BoJ) Summary of Opinions, which showed a hawkish tone and growing reasons for an earlier tightening cycle. Analysts at DBS Group Research noted that firm wage-driven reflation and strengthening CPI are key supports for action.

The EUR/JPY pair is currently trading around 183.50, after failing to sustain gains above 184.00.