EUR/JPY Tumbles as BOJ Hike Bets Boost Japanese Yen

The EUR/JPY currency pair took a hit on Monday, falling by 1.11% and trading near 179.45. The Japanese Yen's strength was driven by expectations of a Bank of Japan policy tightening, with markets pricing in a 25-basis-point hike for the September 17-18 meeting.

Some analysts believe there could be room for an even larger move as inflation expectations and long-term bond yields rise. Additionally, talk of possible foreign exchange intervention by Japanese authorities has added to the Yen's strength, putting downward pressure on the EUR/JPY cross.

In contrast, the Euro faced mixed data from Germany, with industrial production falling 1.1% month-on-month in July and down 1.6% year-over-year. This was a disappointment given the consensus estimate of a 0.3% rise.