Uncertainty over a Bank of Japan rate hike and hopes for a peace agreement between Russia and Ukraine undermine the yen.

Today, Tuesday, for the second day in a row the EUR/JPY pair remains in sideways movement. The recent agreement between the United States and the European Union eased concerns about deflationary pressure from tariffs. Solid economic prospects have fueled speculation that the ECB will keep current rates at least until December, which continues to support the euro and, in turn, the EUR/JPY pair.

At the same time, the Japanese yen shows weak dynamics amid uncertainty about the timing of the Bank of Japan's next rate hike. Hopes for an end to the protracted conflict between Russia and Ukraine also reduce demand for the yen as a safe-haven currency, contributing to EUR/JPY's rise.

At the end of July, the Bank of Japan revised its inflation forecast upward, leaving open the possibility of a rate hike by year-end. This restrains active buying of the Far Eastern currency and caps the EUR/JPY pair's upside, making it prudent to wait for confirmation of further moves before planning new long positions. For better trading opportunities, it would be preferable to wait for ECB President Christine Lagarde's speech on Wednesday.

Overall, the fundamental backdrop suggests a possible widening of the EUR/JPY trading range in the absence of major macroeconomic releases on Tuesday. From a technical standpoint, the cross has a new resistance at 172.70; breaking above it would target the 173.00 round level. Support remains at the 172.00 round level. A move below it could push the pair toward last week's low near the 171.00 round level, with an obstacle at 171.35. However, as long as oscillators on the daily chart remain positive, the pair retains a bullish tone.