EUR/JPY faces barricades around 141.50 despite ECB reiterates further policy tightening
|- EUR/JPY has slipped after sensing selling interest around 141.50 ahead of Tokyo inflation.
- Tokyo’s headline CPI is seen at 4.4% while the core CPI might scale to 2.8%.
- The ECB is constantly reiterating the need for further policy tightening to contain the inflation mess.
The EUR/JPY pair is facing pressure in extending its recovery move above the immediate resistance of 141.50 in the early Tokyo session. The cross attempted a recovery below 141.00 on Wednesday after a massive sell-off move. The Euro faced immense pressure after the release of the German IFO- Business Climate (Jan) data. The economic data remained in line with the estimates at 90.2 but higher than the former release of 88.6.
German IFO Business Survey, the institute’s Economist Klaus Wohlrabe cited that “the German economy is starting the year with cautious optimism.” He added that the economy might not face any recession but the Gross Domestic Product (GDP) will probably shrink slightly in Q1 - mainly due to consumption. It is worth noting that 48.4% of companies complained in Jan about supply bottlenecks vs. 50.7% in Dec.
For further policy tightening European Central Bank (ECB) President Christine Lagarde and other policymakers are continuously reiterating the need for further interest rate hikes to contain the inflation mess.
ECB Governing Council member Gabriel Makhlouf said on Wednesday "We need to continue to increase rates at our meeting next week – by taking a similar step to our December decisions," as reported by Reuters. He further added that they need to increase rates again at the March meeting.
On the Tokyo front, investors will be focusing on the release of the Tokyo inflation, which is scheduled for Friday. The headline Tokyo Consumer Price Index (CPI) (Jan) is seen higher at 4.4% vs. the former release of 4.0%. Also, the core inflation that excludes oil and food prices is expected to increase marginally to 2.8% against the 2.7% released earlier.
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