• EUR/JPY depreciates as the Japanese Yen holds gains after Japan’s preliminary Q3 GDP data came in less negative.
• Japan’s preliminary GDP declined 0.4% QoQ in Q3, beating expectations for a 0.6% drop.
• The Euro may also regain support amid cautious sentiment over the ECB’s near-term monetary policy outlook.

EUR/JPY extends its losses for the second consecutive day after pulling back from a record high of 179.97 reached in the previous session, trading around 179.40 during the Asian hours on Monday. The currency cross remains subdued as the Japanese Yen (JPY) holds ground after the release of better-than-expected Japan’s Gross Domestic Product (GDP) data for the third quarter.

Japan’s preliminary GDP fell 0.4% quarter-over-quarter (QoQ) in Q3 2025, reversing the 0.6% growth seen in Q2 but outperforming expectations for a 0.6% contraction. On an annualized basis, the economy shrank 1.8%, a smaller drop than the anticipated 2.5% decline, following a slightly revised 2.3% expansion in the previous quarter.

However, the JPY could face challenges as Prime Minister Sanae Takaichi urged the Bank of Japan (BoJ) to keep interest rates low, stressing that monetary policy must continue supporting solid economic growth and stable inflation.

Meanwhile, BoJ Governor Kazuo Ueda pointed to firm consumption driven by rising household incomes and a tightening labor market, adding that underlying inflation is steadily moving toward the central bank’s 2% target, signaling that a rate hike remains a near-term possibility.

The EUR/JPY cross may regain its ground as the Euro (EUR) could further receive support from the cautious sentiment surrounding the near-term European Central Bank’s (ECB) monetary policy outlook. The ECB is widely expected to keep rates unchanged, supported by stable economic performance and inflation near target.

Bloomberg reported on Saturday that European Central Bank (ECB) Governing Council Member Olli Rehn cautioned that the risk of slowing inflation should not be overlooked, though upside risks remain. Rehn noted that the euro-area economy is holding up despite disruptions from the Trump administration’s tariff policies, with growth slow but steady. He also emphasized the need for strong bank buffers and a vigilant policy stance.