EUR/JPY bears approach 158.00 on downbeat German Industrial Production, sluggish yields

• EUR/JPY remains on the back foot around intraday low while snapping three-day winning streak.
• German Industrial Production for July slides to -2.1% YoY versus -1.5% prior.
• Sluggish yields, ECB blackout join hawkish BoJ concerns to lure sellers.
• Eurozone Q2 GDP, risk catalysts eyed for clear directions.

EUR/JPY holds lower grounds near the intraday bottom of around 158.20 while printing the first daily loss in four amid the early hours of Thursday’s European trading. In doing so, the cross-currency pair justifies downbeat prints of the German Industrial Production (IP), as well as the hawkish bias about the Bank of Japan (BoJ), amid sluggish Treasury bond yields and the European Central Bank (ECB) policymakers’ blackout period.

Germany’s Industrial Production (IP) for July dropped to -2.1% YoY versus upwardly revised -1.5% prior while the monthly IP figures dropped below -0.5% market forecasts to -0.8%, versus -1.4% previous readings (revised from -1.5%).

The latest German numbers join the mostly downbeat prints of the Eurozone statistics and unimpressive comments from the ECB policymakers to propel the economic slowdown woes for the Old Continent, which in turn weighs on the EUR/JPY pair. Among the data, German Factory Orders and Eurozone Retail Sales recently disappointed the bloc’s currency while raising doubts about ECB President Christine Lagarde’s defense of hawkish bias. It’s worth noting that a slew of ECB Officials crossed wires on Wednesday to mark the last-ditched efforts to showcase their capacity to lift the rates but the markets couldn’t believe them more.

Elsewhere, BoJ policymaker Junko Nakagawa crossed wires earlier in the day while defending the easy monetary policy by stating that it is appropriate to maintain the easy monetary policy for the time being. The policymaker, however, also added that they’re still not at the stage where they can say Japan has stably, sustainably achieved the BoJ price target. On the contrary, BoJ’s Nakagawa also highlighted the various side-effects of the monetary easing.

It should be noted that the market’s fears of global economic slowdown ex-US seem to propel the Treasury bond yields and weigh on the Yen prices. However, the same triggers the fears of Japanese policymakers’ market intervention to defend the currency, which in turn seemed to have prod the JPY of late.

That said, the US 10-year Treasury bond yields seesaw near the two-week high registered the previous day around 4.30%, near 4.29% at the latest, whereas the two-year counterpart prints the first daily loss in four by retreating from the weekly top to 5.01% as we write.

Looking ahead, the final readings of the Eurozone Gross Domestic Product (GDP) for the second quarter (Q2) will be eyed ahead of Friday’s Japan Q2 GDP for clear directions.

Technical analysis

Despite the EUR/JPY pair’s latest weakness, a one-month-old ascending support line, around 157.90 by the press time, appears the key to the seller’s conviction.