Yen selling could be in for a pause as the market resets in the wake of global central bank easing and uneven U.S. data.

EUR/JPY is slightly lower following the ECB's 25bp rate cut, along with a reduction in its 2026 growth and inflation forecasts. ECB President Christine Lagarde highlighted downside growth risks, with trade tensions under a new U.S. administration potentially affecting future exports.

This follows 50 basis point cuts by the Bank of Canada the Swiss National Bank.

This stimulus trend is expected to continue into next week, with the Fed widely expected to cut 25bp, despite above-target inflation. A brief dip in U.S. Treasury yields after an uptick in weekly jobless claims signals that markets are focused more on growth than inflation.

Stimulus expectations have supported equity markets and kept the yen trading defensively in December. While seasonals remain yen bearish, this positive sentiment could reverse after next week's Fed meeting, especially if U.S. economic data begins to disappoint or if stock prices falter.

Until more clarity, growth worries will cap EUR/JPY at its 21-day moving average of 160.53 nearby cloud bottom at 160.91. USD/JPY hovers above a key pivot level at 152 and nearby 152.04 200-day moving average, although upward momentum has stalled. The pair is currently forming a doji near the middle of its 21-day Bollinger Bands.

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(Robert Fullem is a Reuters market analyst. The views expressed are his own.)

((robert.fullem@thomsonreuters.com;))