EUR/JPY ignores German Factory Orders, remains depressed near 156.00 amid downbeat yields

EUR/JPY remains sidelined around 156.00 as it pays little heed to the German Factory Orders data amid early Friday morning in Europe. In doing so, the cross-currency pair struggles for clear directions amid downbeats yields and mixed concerns about the European Central Bank (ECB) and the Bank of Japan (BoJ).

Germany’s Factory Orders grew 3.0% YoY versus -4.4% prior while the monthly growth came out as 7.0% from 6.2% previous readings and -2.0% market forecasts.

That said, Thursday’s softer prints of the Eurozone Producer Price Index (PPI) for June, the lowest in three years, with -3.4% YoY figures versus -3.1% expected and -1.6% prior (revised), weighed on the EUR/JPY price the previous day. On the same line were the final readings of the bloc’s HCOB Composite PMI and Services PMI for July deteriorated while the same activity numbers for Germany improved from the initial forecasts for the said month.

Furthermore, the mixed comments from European Central Bank (ECB) board member Fabio Panetta also weighed on the pair as he supported high interest rates for a longer time via a webinar. The policymaker, however, also added, “Inflation risks are balanced and economic activity is weak.”

It should be noted that the Bank of Japan’s (BoJ) two unscheduled bond-buying programs and the decision-makers’ defense of the easy-money policy flags fears of the BoJ’s exit from the record low interest rate and/or a tweak to the Yield Curve Control (YCC) policy.

Elsewhere, top-tier Treasury bond yields retreat from the multi-month high marked the previous day and exert downside pressure on the EUR/JPY price, which in turn stops the quote from cheering the German data.

Looking forward, Eurozone Retail Sales for June, expected -1.7% YoY versus -2.9% prior, will be important to watch for intraday directions of the pair. Above all, the likely monetary policy divergence between the ECB and the BoJ keeps the EUR/JPY bears hopeful.

Technical analysis

Bullish megaphone trend-widening formation keeps EUR/JPY buyers hopeful despite the latest U-turn from the pattern’s top line, close to 157.60 at the latest. That said, the 50-DMA level of 154.50 can restrict the immediate downside of the pair ahead of directing it to the stated megaphone’s bottom line of around 152.70.