EUR/JPY Gains Traction Above 185.00 Amid Disappointing Japanese GDP Data

The EUR/JPY cross has gained strength to around 185.20 in early European trading on Thursday, as the Japanese Yen softens against the Euro amid disappointing Japanese Gross Domestic Product (GDP) data.

Japan's economic growth in the second quarter fell short of forecasts, with GDP expanding 0.3% versus a 0.5% growth prior. This comes as market consensus was for 0.5%, and some analysts had even predicted Japan's economy might slip into negative growth due to higher import prices and supply constraints.

However, growing bets that the Bank of Japan (BoJ) could raise interest rates as early as September 2026 may help limit the JPY's losses. Overnight index swaps are pricing in an about 80% chance of a BoJ rate hike in the next policy meeting, according to Reuters.