EUR/JPY displays a modest rebound from 140.00, ECB-BOJ policy in focus

• EUR/JPY has witnessed a modest recovery after a sharp correction towards 140.00.
• The ECB to elevate its interest rates for the first time in 11 years.
• A dovish stance is expected by the BOJ to keep flushing liquidity into the market.

The EUR/JPY pair has displayed a less-confident rebound from the psychological support of 140.00. The cross has sensed barricades around 140.0 after a modest recovery. Going forward, the asset is expected to display wild moves as investors are shifting their focus towards the monetary policy announcement by the European Central Bank (ECB) and the Bank of Japan (BOJ) this week.

Considering the market chatters, the ECB is expected to break its 11-year-long status-quo maintenance and will announce a rate hike.  Price pressures are impacting the households as a large real income slump has impacted their consumption and savings patterns significantly.

In order to tame the roaring inflation, the ECB has already announced the conclusion of the Asset Purchase Program (APP) to squeeze liquidity. Now, the focus will shift to interest rate elevation to chase down easy money available in the market.

Apart from that, this week the release of eurozone Consumer Confidence will be of utmost importance. A preliminary estimate for the eurozone Consumer Confidence data is -24.5 vs. -23.6 reported earlier.

On the Tokyo front, the Bank of Japan (BOJ) is expected to maintain the status quo in its interest rate decision announcement. A dovish stance is expected from BOJ Governor Haruhiko Kuroda as the BOJ is bound to revive overall demand in the economy. The BOJ is focusing on keeping the inflation rate above 2% and in order to address the same, it needs to elevate the wage prices simultaneously.