• EUR/JPY attracts some buyers on Tuesday and snaps a three-day losing streak.
• Bets that the ECB is done cutting rates act as a tailwind for the EUR and the cross.
• Receding safe-haven demand undermines JPY and also lends support to spot prices.

The EUR/JPY cross is building on the overnight modest bounce from the vicinity of the 180.00 psychological mark, or a four-day low, and gaining some positive traction during the Asian session on Tuesday. Spot prices, for now, seem to have snapped a three-day losing streak and currently trade around the 180.70 area, up just over 0.10% for the day, as traders await Eurozone inflation data before placing fresh directional bets.

The flash estimate could show that the Eurozone Harmonized Index of Consumer Prices (HICP) rose 2.1% YoY in November, while the core gauge edged higher to 2.5% from the 2.4% in October. Inflation figures released on Monday from the biggest Eurozone economies – France, Spain, and Italy – show no immediate threat of price hikes. However, German inflation figures came in unexpectedly high. This, in turn, reinforces the argument for the European Central Bank (ECB) policy hold, which acts as a tailwind for the shared currency and the EUR/JPY cross.

The Japanese Yen (JPY), on the other hand, edges lower as a positive risk tone is seen undermining demand for traditional safe-haven assets. This turns out to be another factor lending support to spot prices. Any meaningful JPY depreciation, however, seems elusive in the wake of the growing acceptance that the Bank of Japan (BoJ) will stick to the policy normalization path. The bets were reaffirmed by hawkish comments from BoJ Governor Kazuo Ueda on Monday, saying that the likelihood of the central bank's economic and price projections being met is rising.

Moreover, Japan’s Finance Minister Satsuki Katayama said on Sunday that recent erratic swings in the foreign exchange market and rapid JPY weakening are clearly not driven by fundamentals. It’s our position to issue warnings against such matters, Katayama added further. The remarks fueled speculations that Japanese authorities would step in to stem further weakness in the domestic currency, which might hold back the JPY bears from placing aggressive bets. This, in turn, could act as a headwind for the EUR/JPY cross and cap any meaningful intraday appreciation.