• EUR/JPY snaps two-day losing streak and rises to near 182.15 amid weakness in the Japanese Yen.
• This week, the ECB is expected to leave interest rates unchanged, while the BoJ seems to raise them by 25 bps.
• The German IFO Business Climate unexpectedly dropped to 87.6 in December from 88.0 prior.

The EUR/JPY pair is up 0.25% to near 182.15 during the European trading session on Wednesday. The pair trades higher as the Japanese Yen (JPY) underperforms its major pairs, despite traders remaining confident that the Bank of Japan (BoJ) will raise interest rates in its monetary policy meeting on Friday.

The BoJ is expected to hike borrowing rates by 25 basis points (bps) to 0.75% as comments from Bank of Japan (BoJ) Governor Kazuo Ueda, came last week, signaled that the central bank is “closer to attaining its inflation target”, adding that the odds of “central bank's baseline economic and price outlook materializing had been gradually increasing”.

Given firm market expectations that the BoJ will tighten its monetary conditions, investors will look for comments about the timeframe for the next interest rate hike.

While the Euro (EUR) trades higher against the JPY, it is underperforming its other peers ahead of the European Central Bank’s (ECB) monetary policy decision on Thursday. The ECB is widely anticipated to keep the Deposit Facility Rate steady at 2% as a majority of officials have stated lately that there is no need for monetary policy adjustment as inflation is close to the central bank’s target of 2%. Investors will pay close attention to cues regarding how long the ECB will hold interest rates at their current levels.

On the economic front, the German business morale has surprisingly dropped in December. Earlier in the day, the German IFO Institute's Business Climate Index came in lower at 87.6 from 88.0 in November, while it was expected to improve to 88.2.