EUR/JPY struggles to defend 144.00 on mixed Japan economics, sluggish yields

• EUR/JPY licks its wounds after positing the biggest daily loss in two weeks.
• Japan’s Tankan data shows Q4 manufacturers' mood worsens, inflation expectations jump to record high.
• Treasury bond yields remain pressured after snapping three-day uptrend.
• Risk-negative catalysts, anxiety ahead of market-moving events also challenge EUR/JPY pair buyers.

EUR/JPY consolidates the biggest daily loss in a fortnight, also probing the previous day’s U-turn from a three-week top, as it defends the 144.00 threshold during early Wednesday. The cross-currency pair’s latest inaction could be linked to the mixed updates from Japan, as well as the cautious mood ahead of the monetary policy meetings of the US Federal Reserve (Fed) and the European Central Bank (ECB).

“Business confidence among big Japanese manufacturers worsened in the three months to December for a fourth straight quarter, the Bank of Japan's closely watched Tankan survey showed, amid rising costs of living and a slowdown in the global economy,” reported Reuters. The news also stated that Japanese firms' inflation expectations for one and three years ahead both hit the highest level on record.

Elsewhere, the risk-negative catalysts surrounding China also seem to restrict the EUR/JPY latest moves. The International Monetary Fund (IMF) Managing Director Kristalina Georgieva was spotted expecting slower economic growth for China due to the latest jump in the daily Covid cases. Additionally, Bloomberg came out with the news suggesting that the Chinese leaders delayed the economic policy meeting due to the COVID-19 problems. On the same, the Asian Development Bank (ADB) cut China's 2023 economic growth forecast to 4.3% from the 4.5% estimate in September.

It should be noted that Friday’s downbeat US inflation numbers and recently firmer European statistics keep the traders on edge ahead of the upcoming monetary policy meetings of the Fed and the ECB, up for Wednesday and Thursday respectively. The same also limits the EUR/JPY pair’s immediate moves.

While portraying the mood, the S&P 500 Futures print a three-day uptrend near 4,065, up 0.25% intraday, whereas the US 10-year Treasury yields decline one basis point (bps) to 3.49%, after snapping the three-day downtrend.

Moving on, Euro Area Industrial Production for October, expected -1.5% versus 0.9% prior, will be important for EUR/JPY pair but major attention will be given to the Fed’s action. However, the pre-ECB anxiety could challenge the quote’s short-term moves.

Technical analysis

A clear downside break of the eight-day-old ascending support line, now resistance around 144.60, directs EUR/JPY bears toward the monthly low near 140.75.