Euro edges down against Japanese Yen ahead of Eurozone HICP data

During the European trading session on Tuesday, the Euro edged slightly lower against the Japanese Yen. The Euro is facing mild pressure before the release of Eurozone flash Harmonized Index of Consumer Prices (HICP) data for August. Prior to the inflation figures, HICP data from Germany, France, and Spain revealed that price pressures increased.

Eurostat expects the headline HICP growth to remain robust at 3.3% Year-on-Year (YoY) compared to 2.9% in July. The core HICP, which excludes volatile components such as food, energy, alcohol, and tobacco, grew by 2.5% YoY. The Eurozone HICP data could significantly influence European Central Bank (ECB) interest rate expectations.

Market experts believe the ECB is likely to raise interest rates during the policy meeting this month. ING strategists predict that the European Central Bank is almost certain to hike rates again next week, citing "insurance" hike, meant to strengthen the disinflation narrative rather than reacting to a renewed inflation surge. However, they caution that further tightening could imply the ECB's belief in restrictive policy as necessary, a more daring move without data showing a core inflation uptrend.