EUR/JPY turns sideways below 143.40 as focus shifts to ECB Lagarde’s speech

The EUR/JPY pair is displaying a lackluster performance in early Asia as investors await the speech from European Central Bank (ECB) President Christine Lagarde for fresh impetus. The cross is hovering around the critical hurdle of 143.40 and is likely to remain sideways amid the unavailability of a fresh trigger.

The ECB President's speech will provide fresh cues about the likely monetary policy action. Meanwhile, ECB policymakers delivered similar responses on interest rate guidance on Tuesday. ECB Chief Economist Phillip Lane is dubious about the inflation peak as it has been achieved or is still to come next year. He further added that he expects more rate hikes, but "a lot has been done already".

While Constantinos Herodotou, Governor of the Central Bank of Cyprus, said, “There will be another hike in rates, but we are very near neutral rate.”

On the Japanese yen front, Bank of Japan (BOJ) Governor Haruhiko Kuroda is not ready to call for a termination of policy easing till wag inflation reaches around 3% to push inflation sustainably to the 2% target, as reported by Reuters. The BOJ is bound to keep flushing liquidity into the economy until the economy gets strengthened as desired.

For further guidance, the release of Japan’s Gross Domestic Product (GDP) data will provide significant cues. As per the projections, Japan’s GDP is expected to contract by 1.1% against the prior contraction of 1.2%. At the same time, the quarterly data is likely to contract by 0.3%, similar to the prior release. A contraction in Japan’s GDP when the economy struggles to push inflation higher may force more policy easing measures by the BOJ.