EUR/JPY extends its upside above the 158.30 area, eyes on Eurozone CPI, ECB meeting minutes

• EUR/JPY gains momentum above the 158.30 area, supported by the European Central Bank (ECB) hawkish comments.
• ECB President Lagarde would set rates at restrictive levels to achieve inflation to the target of 2%. Japanese policymakers said that underlying inflation remains below its target, will maintain the current policy framework.
• Investors await Eurozone CPI, ECB meeting minutes due on Thursday.

The EUR/JPY cross extends its upside for the third consecutive day in the Asian session on Monday. The cross currently trades around 158.35, gaining 0.17% on the day.

At the Jackson Hole Symposium, European Central Bank (ECB) President Christine Lagarde stated that the battle against inflation is not yet won. She emphasized the importance of central banks providing an economic nominal anchor and ensuring price stability while setting interest rates at restrictive levels for as long as it takes to achieve inflation to the ECB's medium-term target of 2%.

Furthermore, ECB Governing Council member Martins Kazaks said that it may be too early to pause interest rate hikes now as a premature halt in the fight against inflation could exert more pressure on the economy in the future. Markets anticipate a 50% possibility of an additional rate hike in the ECB September meeting following the ECB’s policymakers' comments. That said, the divergence in monetary between the ECB and the Bank of Japan (BoJ) lifts the Euro against its rivals.

Across the pond, Governor Kazuo Ueda of the BoJ stated at a Federal Reserve symposium on Saturday that the central bank considers underlying inflation to be below its objective and will therefore maintain the current ultra-loose monetary policy framework. Policymakers stated that domestic demand remained robust and company fixed investment was sustained by record high profits.

Looking ahead, traders await the top-tier data from the Eurozone docket for fresh impetus. The German Consumer Price Index (CPI) data will be released on Wednesday, followed by the German Retail Sales and Eurozone CPI data due on Thursday. Furthermore, ECB will release its meeting minutes on Thursday.