EUR/JPY grinds higher past 137.00 amid downbeat German data, mixed mood

• EUR/JPY trims intraday gains during three-day uptrend, sidelined of late.
• Germany’s Factory Orders slumped the most in five months in March.
• Post-Fed optimism recedes on EU, China headlines, ECB’s Lane eyed.

EUR/JPY remains sidelined around 137.25-30 during the third positive daily performance on Thursday.

The cross-currency pair initially cheered the market’s post-Fed cautious optimism to print gains before German Factory Orders probed bulls. Also challenging the pair’s upside are the recent headlines concerning the European Union’s (EU) sanctions on Russia, China’s covid conditions and the Sino-American tussles.

Germany’s seasonally adjusted (s.a.) Factory Orders for March shrank 4.7% versus expectations of a 1.1% contraction and 0.8% prior decline. The reading dropped the most since late 2021.

Elsewhere, French Energy Minister Barbara Pompili mentioned that she is confident they will reach an EU consensus on a Russian oil import embargo by the end of this week. On Wednesday, the EU announced the sixth round of sanctions on Moscow while also presenting a proposal to ban total energy imports from Russia within the next six months.

Also challenging the sentiment, as well as EUR/JPY is the news that the US Securities and Exchange Commission (SEC) added over 80 Chinese firms to the list of companies facing probable delisting from the US exchanges. Furthermore, covid fears from China and pre-NFP caution are extra catalysts that challenge the pair’s upside momentum.

It should be noted that the market sentiment improved after the Fed matched wide market forecasts by providing 50 basis points (bps) of a rate hike and clues for the Quantitative Tightening (QT) the previous day. The reason could also be linked to Fed Chair Jerome Powell’s rejection of a rate hike worth 75 basis points (bps) in upcoming meetings.

Moving on, comments from ECB Policymaker Philip Lane and risk catalysts can entertain EUR/JPY traders ahead of Japan’s return to markets after a week-long holiday on Friday.

Technical analysis

The 21-DMA puts a floor under the short-term EUR/JPY prices around 136.88, suggesting further advances amid firmer RSI and MACD signals. The recovery moves, however, need validation from March’s peak of 137.53.