EUR/JPY drops to 156.80 following BoJ’s Ueda hawkish comments

• EUR/JPY loses momentum following the Bank of Japan's (BoJ) hawkish statement.
• European Central Bank (ECB) is expected to hold interest rates unchanged on Thursday.
• Japanese policymakers said BoJ could exit its negative interest rate policy when its inflation target of 2% is insight.
• ECB monetary policy decision will be in the spotlight this week.

The EUR/JPY cross loses traction below the 157.00 mark during the early European trading hours on Monday. The cross currently trades near 156.65, losing 0.97% for the day. That said, the recent Japanese policymaker's comment is the main driver for the pair’s movement on Monday. Market players await the key European Central Bank event on Thursday for fresh impetus.

On Friday, the German Harmonised Consumer Price Index (HICP) for August came in at 6.4% YoY, as the market expected whereas the core CPI remained unchanged at 6.1%, Destatis reported on Friday. Furthermore, the Eurozone Gross Domestic Product (GDP) for the second quarter (Q2) grew 0.1% versus 0.3% prior, missing market expectations at 0.3%. The discouraging data might convince the European Central Bank (ECB) to abandon its hawkish stance for the upcoming meeting.

The majority of analysts expect the European Central Bank (ECB) to keep interest rates steady at its September policy meeting on Thursday, according to a Reuters poll. The ECB's stance is dependent on incoming economic data. However, the recent Bank of Japan (BoJ) recent comment boosts the Japanese Yen (JPY) against its rivals on Monday.

In response to Bank of Japan Governor Kazuo Ueda's hawkish statements, the Japanese yen (JPY) strengthened broadly and the benchmark 10-year Japanese Government Bond (JGB) yield hit the highest level since January 2014. Ueda stated in the interview on Monday that the central bank could exit its negative interest rate policy when its inflation target of 2% is near. Policymakers also said that the BOJ would have sufficient evidence by the end of the year to evaluate whether interest rates should stay negative.

Moving on, the Eurozone Industrial Production MoM for July will be due on Wednesday. The attention will shift to the European Central Bank (ECB) interest rate decision on Thursday. On Thursday, Japanese Industrial Production for July will be released. Traders will take cues from these figures and find trading opportunities around the EUR/JPY cross.