The EUR/JPY pair is losing slight ground, holding losses below 164.40 following the release of the ZEW Economic Sentiment Surveys for Germany and the Eurozone.

In May, Germany's ZEW Economic Sentiment Index surged to 25.2, marking a sharp rebound from -14 in April and significantly exceeding the market forecast of 11.9. Similarly, the Eurozone's ZEW sentiment index rose to 11.6 in May from -18.5 in the previous month. These figures indicate improved economic expectations in the region, which could support the euro.

According to Reuters, several ECB officials, despite some internal disagreements, believe their current policy stance reinforces existing strategies and paths toward rate cuts, citing inflation and ongoing trade uncertainties. This is a key reason the euro remains under pressure.

Meanwhile, the Japanese yen has strengthened despite persistent uncertainty regarding the Bank of Japan's interest rate path. BoJ Deputy Governor Shinichi Uchida acknowledged both upside and downside risks linked to potential U.S. tariffs, warning that such trade measures could weigh on Japan's economy. He noted that if global economic conditions improve, Japan's economic growth may decelerate to a potential level before gradually recovering.

Against the backdrop of a tight labor market, Uchida also emphasized rising wages, cautioning that companies are likely to continue passing on higher labor costs to consumers. According to him, this could help support underlying inflation by lifting inflation expectations over time.

The BoJ's Summary of Opinions from its April 30–May 1 policy meeting underscores ongoing uncertainty. One board member stated that if economic and inflation trends improve, further rate hikes are likely. However, another warned that U.S. trade policy—especially higher tariffs—poses a significant threat to Japan's economic outlook and inflation trajectory.

As such, the EUR/JPY pair's movements will depend on the economic data from both regions, as well as decisions and commentary from ECB and BoJ officials regarding monetary policy. Traders should closely monitor these developments to make informed trading decisions.

From a technical standpoint, the nearest resistance for the pair is the monthly high at 164.92, followed by the psychological level of 165.00.

Moreover, oscillators on the daily and 4-hour charts remain in positive territory, confirming the bullish outlook. Still, before opening new long positions, it would be prudent to wait for a breakout above the 165.00 level and a firm hold above it.