EUR/JPY weakens below 180.50 as BoJ's Ueda hints at rate hike

• EUR/JPY edges lower to around 180.45 in Monday’s early European session. 
• BoJ’s Ueda signaled that his board might increase interest rates soon, supporting the Japanese Yen. 
• ECB’s Lagarde said the central bank is well-positioned with borrowing costs currently at the right level. 

The EUR/JPY cross attracts some sellers near 180.45 during the early European session on Monday. The Japanese Yen (JPY) strengthens against the Euro (EUR) due to the latest comments from Bank of Japan (BoJ) Governor Kazuo Ueda. The HCOB Manufacturing Purchasing Managers Index (PMI) from the Eurozone, Germany, and France will be released later on Monday.  

BoJ Governor Kazuo Ueda reaffirmed bets for an imminent interest rate hike, pushing Japanese government bond (JGB) yields to their highest levels in years. Ueda said on Monday that the central bank remains on track to raise interest rates further if prices and the economy continue to unfold as expected. 

He further stated that the likelihood of the BoJ’s baseline scenario for growth and inflation being realized is gradually increasing. Traders are now pricing in about a 76% odds of a rate hike when the Japanese central bank makes its next decision on December 19, following Ueda’s speech, up from around 58% probability on Friday. 

On the other hand, the Euro could receive support from the growing acceptance that the European Central Bank (ECB) is done cutting interest rates. ECB President Christine Lagarde said last week that borrowing costs are at the "right level." Meanwhile, ECB Governing Council member Joachim Nagel noted that he’s comfortable with the monetary-policy settings.

Traders will closely monitor the preliminary reading of the Eurozone Harmonized Index of Consumer Prices (HICP) on Tuesday. The HICP inflation is expected to show an increase of 2.2% YoY in November, while the core HICP is projected to show a rise of 2.5% YoY during the same period. Any signs of hotter-than-expected inflation data could lift the EUR against the JPY in the near term.