Trump-Putin Summit Casts Shadow Over EUR/JPY as Markets Await Key Data

The EUR/JPY currency pair is holding steady as investors shift their focus to a crucial upcoming geopolitical event. On Friday, U.S. President Donald Trump announced that he will meet with Russian President Vladimir Putin in Alaska on August 15 to discuss a potential end to the ongoing conflict in Ukraine. This highly anticipated meeting is influencing market sentiment, with a cautious mood prevailing and leading to a slightly weaker Euro against the Japanese Yen.

While the pair has seen some of its recent upward momentum fade, the underlying bullish trend remains in place. This is largely attributed to the contrasting monetary policies of the European Central Bank (ECB) and the Bank of Japan (BOJ).

In July, the ECB kept its policy rates unchanged, signaling a pause after a series of rate cuts aimed at boosting eurozone growth. While policymakers had previously been easing, some officials now suggest that the easing cycle may be complete, and some banks are even projecting a potential rate hike in 2026. This has led to reduced market expectations for further cuts this year.

In contrast, the BOJ also held its short-term policy rate in July. However, the bank’s “Summary of Opinions” revealed that some members are open to another rate hike before the end of the year if inflation pressures persist. This hawkish sentiment, however, is complicated by domestic political instability in Japan, which could delay any policy action.

Taders are keenly awaiting a fresh dose of economic data. Gross Domestic Product (GDP) reports from both the Eurozone and Japan are scheduled for release on Thursday. These figures could provide the fresh directional cues that the market is seeking, potentially breaking the current consolidation in the EUR/JPY pair. From a technical standpoint, the pair remains above its 50-day Simple Moving Average, with initial support at 171.37. A decisive move below this level could open the door for a larger decline.