EUR/JPY: Comments from ECB lawmaker, risk-on confront soft Japan data


  • Knot joins ECB Chief Economist Peter Praet in doubting the ECB’s future monetary policy aims.
  • Risk-on sentiment challenges the pair’s decline ahead of Eurozone CPI.

The EUR/JPY pair is taking the bids around 124.60 on early Monday. Comments raising doubts over the ECB’s future monetary policy tightening from the governing council member gained initial attention of the pair traders together with the risk-on sentiment. However, soft data from Japan recently seem in limelight. Traders may concentrate on the Eurozone flash consumer price index (CPI) for fresh impulse.

While market optimism based on prospects of the US-China trade deal helped trigger recent risk-on sentiment, comments from the European Central Bank (ECB) governing council member, Klass Knot, challenged the EUR/JPY ‘s upside.

The US 10-year Treasury yields stretched their recovery from the 15-month low of 2.35% to 2.44%.

The Governor of the Dutch central bank recently conveyed his doubts over the ECB’s future monetary policy tightening. Bloomberg reports that the governing council member seeks a clear reason to consider acting to mitigate the effects of negative interest rates on banks. Knot also raised doubts over tiering is the best way to solve the problem concerning negative rates.

The Euro (EUR) responded negative to the news report but could later-on take advantage of the market risk-on. Traders also considered soft Japanese data as a reason to buy the EUR/JPY pair.

The decline in quarterly release of Tankan large manufacturing index to 12 from 19 prior and 14 expected joined hands with 1.2% growth of large all industry Capex versus 8.0% forecast and 14.3% earlier.

Looking forward, Eurozone CPI and core CPI figures will be important to observe. The Eurozone CPI (YoY) is expected to remain unchanged at 1.5% while CPI Core (YoY) might have softened to 0.9% in March from 1.0% prior.

EUR/JPY Technical Analysis

March 26 high near 125.00, followed by March 21 low near 125.70 and 126.20, are likely nearby resistances for EUR/JPY traders to follow during the quote’s upside.

Meanwhile, 124.00, 123.40 and 122.60 seem adjacent supports to observe in case of the pair’s decline.

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