EUR/JPY remains under selling pressure below the 162.00 mark, all eyes on ECB rate decision

The EUR/JPY cross drops below the 162.00 psychological mark during the early European session on Thursday. Investors will closely monitor the European Central Bank (ECB) Interest Rate decision later in the day. The ECB is expected to hold its policy rate steady at a record 4.0%. After the March policy meeting, market players will shift their focus to the ECB press conference, which might offer some hints about inflation and the economic outlook. At press time, EUR/JPY is trading at 161.80, losing 0.62% on the day. 

On Thursday, Bank of Japan (BoJ) policymaker Junko Nakagawa said that the prospects of sustainably achieving a 2% inflation target are gradually heightening and the central bank will gather information to make monetary policy decisions despite risks and uncertainty. Additionally, BoJ Governor Kazuo Ueda stated that it is fully possible to seek an exit from stimulus while striving to achieve a 2% inflation target. That being said, the hawkish comments from the Japanese authorities provide some support to the Japanese Yen (JPY) and exert some selling pressure on the EUR/JPY cross. 

The ECB is unlikely to cut borrowing rates before its June meeting, given that crucial wage data will only be available in May. Furthermore, the policymakers would take a cautious approach and wait for more evidence of inflation data before considering changing the policy stance. Financial markets anticipate the ECB to wait until June for a first-rate cut of 25 basis points (bps). However, the number of rate cuts will depend on the incoming data.

The ECB Interest Rate decision and press conference will be in the spotlight on Thursday, and this event might trigger volatility in the market. On Friday, the Japanese Labor Cash Earnings, Gross Domestic Product Annualized (GDP) for Q4, and Current Account will be released.