EUR/JPY attracts some sellers below the mid-163.00s, Eurozone PMI data looms
- EUR/JPY loses momentum around 163.22 following the rise in Japanese CPI inflation data.
- The Tokyo CPI climbed 2.6% YoY in February vs. 1.6% prior.
- The ECB is anticipated to hold the rate steady at 4.5% at its March meeting on Thursday.
The EUR/JPY cross loses ground below the mid-163.00s during the early European trading hours on Tuesday. The rise in the Tokyo Consumer Price Index (CPI) for February triggered speculation that the Bank of Japan (BoJ) will exit the negative interest rate regime in the coming month, which lifts the Japanese Yen (JPY) and weighs on the cross lower. EUR/USD currently trades near 163.22, down 0.10% on the day.
Data released from the Statistics Bureau of Japan on Tuesday revealed that the Tokyo CPI climbed 2.6% YoY in February from 1.6% in January. Additionally, the CPI ex Fresh Food and Energy eased to 3.1% YoY in January from the previous reading of 3.3%. The rise in price growth above the central bank’s target in February supported the case for the BoJ’s first interest rate hike since 2007. This, in turn, boosts the JPY against its rivals.
The BoJ board member Hajime Takata hinted at a potential early move by the central bank to abandon its negative interest rate. He stated that the price aim was now within reach and it would be appropriate to change the monetary policy stance. Nonetheless, BoJ Governor Kazuo Ueda delivered a cautious view, saying that he would evaluate more data in order to confirm that a virtuous wage-price cycle is emerging.
On the Euro front, the European Central Bank (ECB) is expected to keep the main refinancing rate steady at 4.5% at its March meeting on Thursday. ECB President Christine Lagarde said last week that disinflation would persist but the central bank needs more evidence data before lowering the interest rate. Investors will take more cues from the press conference. A less hawkish tone could exert some selling pressure on the Euro (EUR) and create a headwind for the EUR/JPY cross.
Later on Tuesday, the HCOB PMI data from Spain, Italy, France, Germany, and the Eurozone will be due. The Eurozone Retail Sales will be released on Wednesday. Market players will closely monitor the ECB rate decision on Thursday. These events could give a clear direction to the EUR/JPY cross.
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
