EUR/JPY refreshes sever-year high above 144.40 amid Eurogroup meeting

• EUR/JPY has printed a fresh seven-year high above 144.40 on optimism from the ongoing Eurogroup meeting.
• ECB hiked interest rates by 75 bps and held energy and food prices responsible for higher inflation.
• The yen bulls failed to capitalize on upbeat Japanese GDP data.

The EUR/JPY pair is on the verge of refreshing its seven-year high above 144.30 on expectations of constructive outcomes from the Eurogroup meeting to strengthen the shared currency bulls. The asset is auctioning near Thursday’s high at 144.29 and is aiming to cross the same as European Central Bank (ECB)-Bank of Japan (BOJ) policy divergence has widened further.

On Thursday, the historic move by the ECB to hike its interest rates by 75 basis points (bps) with shifting it to 1.25% strengthened the eurozone bulls against the Japanese yen. The trading bloc is fighting with the dual threats of soaring price pressures and bleak economic growth. It is widely known that higher interest rates trim growth prospects. Out of the chaos, ECB President Christine Lagarde preferred to ditch the growth prospects and stick to the agenda of bringing price stability.

While discussing the interest rate guidance, the ECB stated that more rate hikes won’t be such bumper and the central bank will remain data-dependent. The central bank has also come out with inflation projections and is expected to average at 8.1% in 2022, 5.5% in 2023, and 2.3% in 2024. The ECB held soaring energy and food prices and supply chain bottlenecks responsible for accelerating price pressures.

On the Tokyo front, the upbeat Gross Domestic Product (GDP) data failed to bring meaningful strength to the yen bulls. The Japanese GDP data landed at 0.9%, higher than the forecasts of 0.7% and the prior release of 0.5%. Also, the annual data improved meaningfully to 3.5% against the expectations and the prior print of 2.9% and 2.2% respectively.