EUR/JPY extends the decline below 169.50, Eurozone GDP data looms

The EUR/JPY cross extends the decline towards 169.20 during the early European trading hours on Friday. The cross edges lower after the release of weaker-than-expected German April Industrial Production. Additionally, the verbal intervention from Japanese authorities early Friday continues to support the Japanese Yen (JPY) and weigh on EUR/JPY for the time being. 

Industrial production in the German manufacturing sector remained in contraction in April, the country's Federal Statistical Office Destatis reported on Friday. The German Industrial output declined 0.1% MoM in April from a 0.4% decrease in March, worse than the estimation of a 0.3% increase. The Euro (EUR) attracts some sellers following the downbeat German Industrial production and creates a headwind for the cross. 

On Thursday, the European Central Bank (ECB) decided to cut interest rates by 25 basis points (bps) at its June meeting, as widely anticipated by markets. ECB policymakers raised their annual average headline inflation outlook for 2024 to 2.5% from 2.3% earlier in its updated macroeconomic projections. Investors await the Eurozone Gross Domestic Product (GDP) for the first quarter (Q1) on Friday for fresh impetus. The GDP number is estimated to grow 0.3% QoQ and 0.4% YoY in Q1, unchanged from the previous reading. 

On the JPY’s front, many analysts believe the Bank of Japan (BoJ) will decide to trim its government bond buying when authorities meet next week. About 70% see the odds of such action rising due to the recent weakening of the Japanese Yen, according to a Bloomberg survey. On Thursday, BoJ Governor Kazuo Ueda said that inflation expectations are gradually rising but have yet to reach 2%, adding that they are “still scrutinizing market developments since the March decision”. Meanwhile, the BoJ board member Toyoaki Nakamura stated that it is suitable to maintain the current policy intact for the time being.