The EUR/JPY cross holds positive ground near 160.75 during the early European session on Friday. The recent German inflation report provides modest support to the Euro (EUR). However, safe-haven flows amid ongoing geopolitical tensions in the Middle East might lift the Japanese Yen (JPY) and cap the upside for the cross. 

The German Harmonized Index of Consumer Prices (HICP) rose 2.6% year-on-year in July, Destatis reported on Friday. This figure was in line with the market expectation. Meanwhile, the HICP inflation remains unchanged at 0.5% MoM in July. 

The European Central Bank (ECB) cut the interest rates from 4% to 3.75%, but there is still no firm path for easing policy further. ECB President Christine Lagarde said during the coast conference the question of any move in September is wide open.  

On the other hand, the dovish comments from Bank of Japan (BoJ) Deputy Governor Shinichi Uchida on Wednesday weigh on the JPY. According to the JP Morgan Asset Management (JPAM), the Bank of Japan is unlikely to hike in the near term. Analysts said that the BoJ is more likely to occur in 2025 if the global economic environment continues steady. Additionally, Japan’s Finance Minister Shunichi Suzuki stated on Thursday that monetary policy decisions fall under the purview of the Bank of Japan, while they will continue watching market developments closely, as reported by Reuters.

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