EUR/JPY stays pressured towards 145.00 despite firmer yields, focus on ECB’s Lagarde

• EUR/JPY prints four-day downtrend with mild losses, depressed near one-week low.
• Yields rallied, equities slumped after Fed’s Powell delivered hawkish signals.
• ECBSpeak failed to impress buyers amid fears of a recession in the bloc.
• ECB President Lagarde could offer intermediate relief with her hawkish rhetoric.

EUR/JPY extends the week-start bearish bias as sellers attack 145.10 during the four-day downtrend to Thursday’s Asian session. The cross-currency pair’s latest weakness could be linked to the market’s geopolitical fears and the recession woes surrounding Eurozone. In doing so, the quote ignores firmer Treasury bond yields and hawkish comments from European Central Bank (ECB) officials.

Downbeat October PMIs for Eurozone and Germany join North Korea’s firing of missiles and Japan’s warning to residents to weigh on the market’s risk profile, which in turn weighs on the risk barometer pair. On the same line could be the coronavirus fears from China as the lockdown surrounding the area involving the world’s largest iPhone factory defied hopes of easing the dragon nation’s zero-covid policy.

Elsewhere, the US 10-year Treasury yields rallied to the highest level in a week, firmer around 4.11% by the press time. The reason could be linked to the US Federal Reserve (Fed) Chairman’s speech highlighting the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. It’s worth noting that the Fed’s 75 bps rate hike couldn’t favor the yields earlier on Wednesday.

It should be noted that the recently hawkish comments from the ECB policymaker Pablo Hernandez de Cos also failed to impress EUR/JPY buyers. In his latest speech, ECB’s de Cos said that ECB "will need additional interest rate increases" to fight off inflation even considering the growing likelihood of a eurozone recession.”

Moving on, the market’s risk catalysts and the movement of Treasury bond yields, as well as comments surrounding the Bank of Japan (BOJ) could entertain the EUR/JPY traders ahead of today’s speech from ECB President Christine Lagarde.

That said, ECB’s Lagarde has been hawkish of late, which in turn signals the odds of the pair’s corrective bounce.

Technical analysis

A daily closing below the five-week-old ascending trend line, around 146.50 at the latest, directs EUR/JPY bears towards the 144.10-00 horizontal support comprising tops marked during late September and early October.