EUR/JPY aims to extend rally above 142.00 as ECB to continue policy-tightening further
|- EUR/JPY is looking to extend its rally above 142.00 on ECB’s hawkish interest rate guidance.
- ECB Lagarde confirmed that wage pressures are keeping Eurozone CPI at elevated levels.
- ECB policymakers agreed to go ahead with a 50 bps hike after the SNB "threw a lifeline" to Credit Suisse.
The EUR/JPY pair has sensed barricades while extending its rally above the immediate resistance of 142.00 in the early Asian session. The cross is expected to continue its upside momentum as the European Central Bank (ECB) would continue to hike its interest rates further as the Eurozone inflation looks persistent and would take plenty of time in declining to near the targeted level.
ECB President Christine Lagarde confirmed that wage pressures are keeping Eurozone Consumer Price Index (CPI) at elevated levels while responding to questions from the press after the monetary policy announcement.
The street was mixed for the ECB’s interest rate decision as the debacle of Credit Suisse, the second-largest Swiss banking firm, alarmed fears of banking turmoil. There is no denying the fact that the announcement of the interest rate decision by the central banks is executed by commercial banks and instability in the latter could create troubles in managing the monetary policy.
Reuters reported on Thursday that European Central Bank (ECB) policymakers agreed to go ahead with a 50 basis points increase in key rates after the Swiss National Bank (SNB) "threw a lifeline" to Credit Suisse. Also, ECB's policy debate was between a 50 basis points hike or leaving rates unchanged. There was no discussion of a 25 bps hike.
For further guidance, analysts at Rabobank see two more hikes of 25bp. Persistent unrest in financial markets is the main downside risk, but if this fades, inflation persistence could still require higher rates.”
On the Japanese Yen front, Bank of Japan (BoJ) policymakers and Japanese officials are pulling their socks to provide a cushion to inflation to remain steady above the 2% target. Japan’s PM Fumio Kishida said this week that they are aiming to raise minimum wages beyond JPY¥1,000 nationwide. Superlative wage gains are going to add effectively to the upside filters for the inflationary pressures as households will be equipped with more funds for disposal.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.