EUR/JPY surges to near 141.40 on advancing hawkish ECB bets

• EUR/JPY has given an upside break of 140.96-141.16 range ahead of the ECB’s interest rate decision.
• To tame the roaring inflation, the ECB is likely to announce a rate hike.
• The eurozone GDP is seen unchanged while Japan’s annual GDP could tumble.

The EUR/JPY pair has imbalanced after displaying a balanced market profile in a narrow range of 140.96-141.16 in the Asian session. The cross is witnessing a sheer upside rally from the last week as investors are underpinning the shared currency bulls against the Japanese yen as a divergence in the European Central Bank (ECB) and Bank of Japan (BOJ) is expected to initiate sooner.

The ECB and BOJ have remained dedicated to an ultra-loose monetary policy in order to keep pushing the aggregate demand higher. Now, the ECB is expected to turn the wheel and may announce a rate hike on Thursday. Mounting price pressures amid ongoing tensions between Russia and Ukraine are forcing the ECB to dictate a rate hike in its monetary policy this week.

Apart from that, Eurostat will report the Gross Domestic Product (GDP) numbers on Wednesday. The quarterly and annualized figures are expected to remain unchanged at 0.3% and 5.1% respectively.

On the Tokyo front, the BOJ is gauging ways to elevate its inflation rate. The BOJ is continuously advocating a combination of wage hikes along with the price rise to keep inflation at desired levels.  Going forward, investors’ focus will remain on the release of Wednesday’s GDP numbers. The annualized GDP is seen as stable at -1%, however, the quarterly GDP could tumble to -0.3% against the prior print of -0.2%.