EUR/JPY maintains sustainability above 150.00 despite fears of Eurozone recession deepen
|- EUR/JPY seems healthy above 150.00 as ECB to remain hawkish ahead.
- Eurozone’s final Q1 GDP contracted by 0.1% which has propelled fears of a recession.
- BoJ Ueda might keep policy unchanged as he is consistently reiterating the need for monetary stimulus.
The EUR/JPY pair is holding its auction confidently above the psychological resistance of 150.00 in the early European session. The cross is holding itself in the bullish trajectory as the European Central Bank (ECB) is committed to raising interest rates further for taming stubborn inflation despite deepening fears of a recession in the Eurozone.
Thursday’s final Eurozone Q1 Gross Domestic Product (GDP) data showed that the growth rate in the shared continent contracted by 0.1% while the market participants were estimating a stagnant performance. In the fourth quarter of CY2022, Eurozone GDP was expanded by 0.1%.
It is worth noting that the German economy is already in recession considering the fact that the nation registered two consecutive contractions in quarterly GDP numbers. Therefore, the odds of the Eurozone falling into a recession are skyrocketing. It seems that higher interest rates by ECB President Christine Lagarde to bring down inflation are heavily impacting Eurozone’s factory and services activity.
Somewhere in the battle of higher interest rates and higher inflation, the shared continent is losing.
According to a clear majority of economists polled by Reuters, ECB President Christine Lagarde will hike its key interest rates by 25 basis points (bps) on June 15 and again in July before pausing for the rest of the year.
Meanwhile, ECB Governing Council member Francois Villeroy de Galhau said “There is really a slowdown in inflation,” He further added, “2023 GDP growth should be at least 0.6%.”
The Japanese Yen is failing to get an upper hand as investors are anticipating that Bank of Japan (BoJ) Governor Kazuo Ueda will keep policy unchanged next week. The street believes that BoJ Ueda is consistently reiterating the need for monetary stimulus to keep inflation steadily above 2%, which could be achieved by higher wages and robust households demand.
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