EUR/JPY maintains position near 172.50 following German IFO data

• EUR/JPY steadies after the release of German IFO economic data on Monday.
• The IFO Business Climate Index rose to 89.0 in August from 88.6 in July, surpassing market expectations of 88.6.
• BoJ Governor Ueda expressed optimism that conditions for another rate hike are coming into place.

EUR/JPY extends its gains for the third successive session, trading around 172.40 during the European hours on Monday. The currency cross moves little after the release of German economic data. Traders will likely observe the GfK Consumer Confidence Survey, followed by the German Retail Sales due later in the week.

The IFO Business Climate Index rose to 89 in August from 88.6 in July. The data beat the market forecast of 88.6. Meanwhile, the Current Assessment Index fell to 86.4 during the same period from 86.5 prior, missing the expected 86.7 figure. The IFO Expectations Index jumped to 91.6 against the previous 90.7 and expected 90.2 readings.

The European Central Bank (ECB) Governing Council member Joachim Nagel said at the Jackson Hole Symposium that the central bank would need a significant shift in the economic outlook to lower borrowing costs again. Meanwhile, ECB Governing Council member Martins Kazaks said that the central bank has entered a new monetary-policy phase where officials can focus on monitoring the economy rather than actively intervening to change its course, Bloomberg reported on Sunday.

The upside of the EUR/JPY cross could be restrained as the Japanese Yen (JPY) may regain its ground due to hawkish sentiment surrounding the Bank of Japan (BoJ) rate hikes. BoJ Governor Kazuo Ueda spoke at the Jackson Hole on Saturday, signaling his optimism that conditions for another interest rate hike were taking shape. He stated that wage hikes are spreading from large enterprises to small and medium enterprises and are likely to keep accelerating due to a tightening job market, per Reuters.