EUR/JPY reverses quickly from 145.00 as BoJ Kuroda keeps policy unchange

The EUR/JPY pair has shown a wild gyration as the Bank of Japan (BoJ) has kept a neutral stance on monetary policy. The cross has reversed quickly after testing the critical resistance of 145.00. An interest rate decision of unchanged monetary policy by BoJ Governor Haruhiko Kuroda was widely anticipated as the current inflationary pressures in the Japanese economy are not grown domestically.

The BoJ has kept interest rates at -0.1% as expected. Also, the central bank has maintained its 10-year Japanese Government Bonds (JGBs) yield target of around 0%. BoJ Kuroda has also mentioned that the Japanese economy is picking up as the impact of the pandemic and supply chain disruptions is fading away.

Earlier, Governor Nominee Kazuo Ueda Ueda was confirmed as the next BoJ governor after approval by both houses of parliament. While Shinichi Uchida and Ryozo Himino were appointed as the next BoJ deputy governors by Japan's upper house.

Last week, BoJ Ueda also highlighted the need of maintaining the expansionary monetary policy as the needle of Japan’s Consumer Price Index (CPI) was moving by import prices as domestic demand and wages were insufficient to spurt price pressures.

On the Eurozone front, investors have started discussing the interest rate decision by the European Central Bank (ECB) for March monetary policy as inflationary pressures are rebounding again despite a spree of rate hikes. The latest survey of 60 economists polled by Reuters during March 7-9 indicates that ECB President Christine Lagarde will push the bank’s deposit rate by 50 basis points (bps). And, 25 bps hikes will be announced at the following three meetings in May, June, and July to give a terminal deposit rate of 3.75%.

The survey also claims that chances of a recession in the Eurozone have diminished to 34% from 50% observed in January’s poll.