• EUR/JPY drifts lower for the second successive day and drops to over a one-month low.
• A softer risk tone, along with BoJ rate hike bets, boosts the JPY and exerts some pressure.
• Dovish ECB expectations contribute to the slide and support prospects for further losses.

The EUR/JPY cross attracts sellers for the second successive day on Wednesday and drops to the 158.20 area, or its lowest level since August 5 during the Asian session. Spot prices, however, manage to recover a few pips in the last hour and currently trade around the mid-158.00s, still down nearly 0.30% for the day amid some follow-through buying around the Japanese Yen (JPY).

Investors turn cautious ahead of the release of the crucial US consumer inflation figures later this Wednesday, which will play a key role in influencing expectations about the Federal Reserve's (Fed) rate-cut path. This is evident from a generally weaker tone around the equity markets and drives some haven flows towards the JPY. Adding to this, hawkish remarks by Bank of Japan (BoJ) board member Junko Nagakawa provide an additional boost to the JPY and exert downward pressure on the EUR/JPY cross. 

Nagakawa noted that even after the July rate hike, real interest rates remain deeply negative, and accommodative monetary conditions are maintained. She added that the BoJ is likely to adjust the degree of monetary easing if the economy and prices move in line with its projection. In contrast, the European Central Bank (ECB) is almost certain to lower rates again at its September meeting on Thursday amid declining inflation in the Eurozone. This further contributes to the offered tone surrounding the EUR/JPY cross.