EUR/JPY Softens as BoJ Rate Hike Chances Rise to 82%

The EUR/JPY cross is trading near 185.50, but still maintains a constructive bias above its 100-day Simple Moving Average (SMA). The Japanese Yen has strengthened against the Euro after data showed that Japan's core Consumer Price Index (CPI) inflation accelerated in July, boosting the case for another rate hike by the Bank of Japan.

The Japanese central bank has priced in a roughly 82% chance of a September rate increase, more than tripling from about 23% immediately before the BoJ's July policy meeting. Analysts at Societe Generale argue that the latest inflation data supports the Bank of Japan's existing normalization path rather than forcing a more aggressive tightening pace.

Traders are awaiting the speech by BoJ Deputy Governor Ryozo Himino on Thursday, which may offer some hint about the pace of rate hikes. A hawkish remark from BoJ policymakers could underpin the JPY and act as a headwind for the cross.