• EUR/JPY oscillates in a narrow range above 156.40 on Tuesday; Market players await the key event.
• German, Eurozone HOCB Composite PMIs raise concern about the economic slowdown in the continent.
• Market participants speculate that the ECB will raise borrowing costs in July and September.
• Japanese policymakers are expected to maintain a dovish policy stance.

The EUR/JPY pair holds ground near 156.40 during the early Asian session on Tuesday. The cross consolidates its recent losses following the downbeat German and Eurozone PMI data, and investors await the interest rate decision from the European Central Bank (ECB) and Bank of Japan (BoJ).

On Monday, the Hamburg Commercial Bank (HCOB) reported that the German HOCB Composite PMI decreased to 48.3 in July from 50.6 in June. This figure might raise the possibility that the economy will enter a recession during the second half of the year. Meanwhile, the HCOB Composite PMI for the Eurozone decreased to 48.9 from 49.0 in the same period. The index hit its lowest point in eight months. Following the data, the Euro weakened against the Japanese Yen amid concern about the economic slowdown in the continent.

Later this week, the cross could turn volatile as the ECB schedules its policy meeting for Thursday. The central bank is expected to raise interest rates by 25 basis points (bps). Market participants speculate that the ECB will raise borrowing costs in July and September.

On the other hand, BoJ Governor Kazuo Ueda put an end to speculation of a Yield Control Curve policy change and said that there was still some way to go before reaching the 2% inflation target. Those comments indicate that Japanese policymakers are expected to maintain a dovish policy stance in order to keep inflation steady at approximately 2%. This, in turn, led to the weakening of the Japanese Yen against its rivals due to monetary policy divergences between the BoJ and ECB.

Looking ahead, market participants are now focusing on the ECB's interest rate decision on Thursday. Then, investors will focus on the BoJ interest rate decision on Friday. These events could significantly impact the EUR/JPY pair.