EUR/JPY fails to sustain above 142.00 as German inflation sets to soften ahead

• EUR/JPY has failed to sustain above 142.00 ahead of German inflation.
• Evidence of de-anchoring Eurozone inflation expectations is not available and it cements further rate hikes from ECB.
• Dovish rate guidance is expected from BoJ Kuroda as Japan’s inflation has been basically fueled by international forces.

The EUR/JPY pair has slipped after failing to sustain above the critical resistance of 142.00 in the early Asian session. The cross has shown exhaustion in the upside momentum as investors are shifting their focus toward preliminary German Harmonized Index of Consumer Prices (HICP) (March) data, which will release on Thursday.

As per the projections, the annual German HICP will soften firmly to 7.5% from the former release of 9.3%. An expected decline in German inflation would relieve some pressure from the European Central Bank (ECB), which is hiking rates extensively to tame persistent inflation. Higher inflation in Germany is running on a tight labor market, which has not shown any sign of weakening yet, stated ECB Governing Council member Isabel Schnabel on Monday.

Despite a sheer decline in German inflation, ECB President Christine Lagarde might continue hiking rates further as the road to the desired level of 2% is far from over. ECB policymaker Mario Centeno cited on Monday, We haven't seen de-anchoring inflation expectations," as reported by Reuters. He further reiterated that the ECB has the tools for "whatever-it-takes" action for banks.

On the Japanese Yen front, investors are keenly awaiting the speech from Bank of Japan (BoJ) ex-Governor Haruhiko Kuroda. Dovish rate guidance is expected from BoJ Kuroda as Japan’s inflation has been basically fueled by international forces. Japan’s administration is entirely focused on increasing wages to multiply inflation with domestic forces and keep the Japanese Yen competitive against other currencies.