EUR/JPY drops back closer to weekly low post-ECB, eyes Lagarde’s speech for fresh impetus
|- EUR/JPY meets with a fresh supply on Thursday and slides back closer to the weekly low.
- Expectations for a hawkish shift by the BoJ underpin the JPY and exert some pressure.
- The intraday selling picks up pace after the ECB announced its monetary policy decision.
The EUR/JPY cross attracts fresh selling in the vicinity of the 142.00 mark on Thursday and continues losing ground through the mid-European session. Spot prices weaken further below the 141.00 round figure and drop to the lower end of the weekly range after the European Central Bank (ECB) announced its policy decision.
As was widely expected, the ECB raises key rates by 50 bps at the end of the February monetary policy meeting. The accompanying policy statement showed that the central bank intends to raise interest rates by another 50 bps in March. The ECB, however, added that it will evaluate the subsequent path of the policy and future rate decisions will continue to be data-dependent, following a meeting-by-meeting approach. This seems to be the only factor that might have disappointed the Euro bulls and exerted fresh downward pressure on the EUR/JPY cross.
The Japanese Yen (JPY), on the other hand, is drawing support from expectations that high inflation may invite a more hawkish stance from the Bank of Japan (BoJ) later this year. The bets were lifted by recent data, which showed that Nationwide core inflation in Japan reached its highest annualized print since December 1981. This further contributes to the offered tone surrounding the EUR/JPY cross and supports prospects for additional losses. Market participants now look to the post-meeting press conference, where comments by ECB President Christian Lagarde will influence the shared currency and provide some impetus to the cross.
Technical levels to watch
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