• EUR/JPY drops but remains focused on breaking above the key resistance of 163.50.
• Traders doubt the BoJ hiking rates again this year.
• The ECB is expected to cut its borrowing rates further by 50 bps this year.

The EUR/JPY pair falls to near 162.80 in Thursday’s European session after its second failed attempt to break above the September high of 163.50. The asset strives to extend its upside amid broader weakness in the Japanese Yen (JPY) due to fading speculation of more hikes from the Bank of Japan (BoJ) this year.

Traders appear to be cautious about the BoJ tightening its policy further this year as weak consumer spending has raised doubts over the maintenance of economic strength. Overall Household Spending, a key measure of consumer spending, declined by 1.9% in August from a nominal growth of 0.1% in July. Though the pace at which the consumer spending measure contracted in August was slower than expectations of a 2.6% decline, it prompted the need for fresh stimulus to boost private consumption.

Meanwhile, the Euro (EUR) has been underpinned against the Japanese Yen, its performance has remained weaker in comparison with other peers due to escalating European Central bank (ECB) dovish bets. Traders have priced in two more rate cuts of 25 basis points (bps) by the ECB this year, suggesting that the central bank will cut its Deposit Facility Rate in both the remaining meetings, which are scheduled for next week and in December.