EUR/JPY sees a downside below 143.00 ahead of Japan’s inflation and BoJ Ueda speech

• EUR/JPY is expected to deliver a downside move below 143.00 ahead of BoJ Ueda’s speech.
• Some further yield-widening discussions are expected from BoJ Ueda’s speech.
• ECB Lagarde’s announcement of one more 50 bps rate hike will push rates to 3.5%.

The EUR/JPY is displaying back-and-forth moves around 143.00 in the Asian session. The Japanese Yen bulls are attempting for the third time to push the cross below the immediate support of 143.00 as investors are expecting some discussions related to an exit from the decade-long ultra-loose monetary policy managed by the Bank of Japan (BoJ) in the speech from BoJ Governor nominee Kazuo Ueda.

Japan’s government has been reiterating that the administration will look for a transitioning process in the monetary policy with novel BoJ leadership to major the Japanese Yen more competitive against other FX currencies. Therefore, some further yield-widening discussions are expected from BoJ Ueda’s speech, scheduled for Friday.

Apart from that, Japan’s National Consumer Price Index (CPI) (Jan) data will remain in focus. The headline CPI is seen higher at 4.5% from the former release of 4.0%. And the core CPI that strips off oil and food prices is seen at 3.2%, higher than 3.0%, in the prior release. The Japanese economy is gradually achieving a higher inflation rate by improving wages and consumer spending.

In the view of economists at Commerzbank “Patience is the name of the game”. Only the BoJ decision in early March, still under Kuroda, might provide a first indication as to how monetary policy will develop if Kuroda really was to pave the way for his successor by widening the yield range. Otherwise, we will have to wait patiently until late April when Ueda will be running his first meeting. And even then, it is rather unlikely that Ueda would immediately turn everything in monetary policy inside out.”

Meanwhile, the Euro is struggling to settle its feet despite hawkish commentary from European Central Bank (ECB) President Christine Lagarde. ECB Lagarde states “Headline inflation has begun to slow down but reiterated that they intend to raise the key rates by 50 basis points (bps) at the upcoming policy meeting. She also cited that the central bank is not seeing a wage-price spiral in the Eurozone.

It is worth noting that the ECB has been hiking interest rates by 50 bps from the past two monetary policy meetings and one more 50 bps rate hike will push rates to 3.5%.