EUR/JPY steadies near 133.20 as investors await EU leaders summit and NATO meeting

• EUR/JPY seeks fresh impetus from EU leaders summit and NATO meeting.
• EU leaders are mixed on the embargo on Russian oil.
• Europe’s higher dependency on Russia may weigh pressure on its economy if an embargo takes place.

The EUR/JPY pair is consolidating in a narrow range of 133.10-133.28 as investors await a fresh trigger for further guidance. The outcome of the European Union (EU) leaders summit and NATO meeting are going to expand uncertainty on Thursday. The pair has been rallying in the last few trading sessions amid broader weakness in the Japanese yen.

The EU leaders summit is going to revolve around the likely decision of the embargo on Russian oil. Russia’s invasion of Ukraine forced the Western leaders to impose sanctions on Moscow. To retaliate against elevated military activity by Russia in Ukraine, the EU planned to ban Russian oil. However, the EU leaders have signaled a mixed response on the agenda. Germany would not withstand the decision as the nation believes that the decision would dampen the related economic activities in the current scenario, which have already been impacted by supply chain bottlenecks and rising oil prices.

It is worth noting that Europe addresses 30% of its energy requirements and 25% of its oil demand from Russia. Therefore, finding a substitute on too short notice won’t be a cakewalk.

Apart from that, US President Joe Biden's meeting with his NATO counterparts will also weigh pressure on the shared currency in case the outcome calls for more sanctions on Russia. On Japan’s docket, investors will focus on Tokyo Consumer Price Index (CPI), which is due on Thursday. A preliminary estimate for the Tokyo CPI is 1.5% higher than the prior print of 1%.