EUR/JPY remains subdued near 171.00 as German economy contracts in Q2, Eurozone GDP eyed

• EUR/JPY holds losses after German economic data was released on Wednesday.
• German Gross Domestic Product declined by 0.1% QoQ in Q2, as expected.
• The BoJ is expected to keep interest rates unchanged on Thursday.

EUR/JPY extends its losses for the third successive session, trading around 171.10 during the European hours on Wednesday. The currency cross holds losses following key economic data from Germany, the largest economy in the Eurozone. Traders shift their focus toward Eurozone GDP data.

Destatis released Gross Domestic Product (GDP) data, showing that the German economy contracted by 0.1% quarter-over-quarter in the second quarter, as expected. The previous reading was a 0.4% increase. Meanwhile, the annual GDP rate climbed by 0.4% in Q2 after reporting no growth in Q1, while beating the market expectations of 0.2%.

German Retail Sales rose 1.0% month-over-month in June, recovering from the revised 0.6% decline reported in May. The market forecast was for a 0.5% increase. Meanwhile, Retail Sales climbed 4.9% YoY, against the previous increase of 2.6%.

The Bank of Japan (BoJ) is expected to keep interest rates unchanged on Thursday as officials gauge the economic impact of US tariffs. The Japanese central bank is also expected to revise its inflation forecast higher in its quarterly outlook.

Japan's ruling Liberal Democratic Party (LDP) decided to hold a joint parliamentary meeting after Prime Minister Shigeru Ishiba resisted growing pressure to resign. On Tuesday, Ishiba agreed to convene the meeting of both houses of the parliament. However, Ishiba said on Monday that his position to remain in the office "has not changed," per NHK.