EUR/JPY sees a downside below 140.00 as Japan’s core CPI escalates

• EUR/JPY is aiming for an establishment below 140.00 as Japan’s core CPI advance.
• The hangover of the hawkish ECB seems over and investors have started dumping eurozone.
• BOJ will continue to purchase JGBs at an annual pace of around 80 trillion yen.

The EUR/JPY pair has witnessed a less-confident rebound from the psychological support of 140.00 in the Asian session. However, the downside remains favored as investors dumped the shared currency on activation of the ‘Buy on Rumor and Sell on News’ indicator after the rate hike announcement by the European Central Bank (ECB). Apart from that, the upside release of Japan’s core Consumer Price Index (CPI) is going to strengthen the yen bulls.

The cross remained in the bullish trajectory from the past week on expectations of a rate hike by the ECB. On Thursday, expectations meet reality after ECB President Christine Lagarde announced a rate hike by 50 basis points (bps). No doubt, the announcement has triggered a divergence in ECB-Bank of Japan (BOJ) policy as both central banks remained stick to their grounded interest rates. The ECB elevated its rates for the first time in the past 11 years.

Apart from that, the BOJ also announced its interest rate decision on Thursday but kept a dovish stance as the central bank is committed to injecting more liquidity into the economy. The BOJ will continue to purchase Japan’s Government Bonds (JGBs) at an annual pace of around 80 trillion yen.

In the Asian session, the Statistics Bureau of Japan released the Inflation data. The National CPI was trimmed to 2.4% vs. 2.5% reported earlier. While the core CPI climbed to 1% from the prior release of 0.8%. The BOJ remained worried as oil and food prices were keeping the inflation rate above %. Now, a recovery in demand for durable goods is going to delight the BOJ policymakers. Also, it will strengthen the yen bulls.