EUR/JPY remains subdued near 176.00 following hawkish remarks from BoJ’s Ueda

• EUR/JPY extends losses as BoJ’s Ueda signals continued policy normalization if economic outlook confidence strengthens.
• Hirofumi Yoshimura, co-founder of Japan’s Ishin party, said the odds of a coalition with the ruling LDP are “50-50.”
• The Euro strengthens after France’s government survives a no-confidence vote.

EUR/JPY loses ground for the third consecutive day, trading around 175.70 during the Asian hours on Friday. The currency cross depreciates as the Japanese Yen (JPY) extends its winning streak after the Bank of Japan (BoJ) Governor Kazuo Ueda noted on Thursday in Washington after a Group of 20 meeting that the bank would continue policy normalization if confidence in its economic outlook improves, leaving room for a near-term rate hike. Ueda added, “There’s no change in our stance that we will adjust the degree of monetary easing if our confidence in hitting the outlook increases,” per Bloomberg.

Traders remain focused on political developments as opposition parties have yet to respond to the ruling Liberal Democratic Party’s (LDP) October 21 proposal to hold a vote for a new prime minister. Hirofumi Yoshimura, co-founder of the Japan Innovation Party, also known as Ishin, said Friday that the chances of the ruling Liberal Democratic Party forming a coalition with his party are “50-50,” as key negotiations continue ahead of the parliamentary vote to choose Japan’s next leader.

The downside of the EUR/JPY cross could be restrained as the Euro (EUR) receives support after France’s government survived a no-confidence vote, as Prime Minister Sebastien Lecornu’s pledge to suspend a key pension reform won backing from some left-wing lawmakers.

The Euro also draws support against its peers as the European Central Bank (ECB) is likely to keep its interest rates unchanged. ECB policymaker and Central Bank of Malta Governor Edward Scicluna said late Thursday that the central bank must not rush further interest-rate cuts. Scicluna added that it’s not clear whether higher trade tariffs will be disinflationary or inflationary, and we shouldn’t jump to conclusions, as this is crucial.