EUR/JPY continues to pull back for a second straight day, trading around 179.40 during Monday’s Asian session. The pair weakens as the Japanese Yen finds support following Japan’s better-than-expected preliminary Q3 GDP data.

Japan’s economy shrank 0.4% QoQ in Q3, beating forecasts of a 0.6% contraction. On an annualized basis, GDP declined 1.8%, softer than expectations for a 2.5% drop. While the data signals economic weakness, it is still less severe than projected, helping the Yen stay resilient.

However, gains in the JPY may be limited. Prime Minister Sanae Takaichi has urged the Bank of Japan to maintain low interest rates to support growth. Still, BoJ Governor Kazuo Ueda highlighted firm consumption, rising household incomes, and inflation steadily approaching the 2% target—keeping the door open for a potential rate hike.

On the Euro side, EUR/JPY may find renewed support as markets remain cautious regarding the ECB’s near-term policy outlook. The central bank is widely expected to leave rates unchanged, backed by steady economic performance and inflation near target.

Over the weekend, ECB Governing Council Member Olli Rehn warned that downside risks to inflation should not be ignored, even as the euro-area economy holds up despite tariff-related disruptions. He emphasized the need for strong bank buffers and a vigilant policy stance, helping maintain underlying support for the Euro.