EUR/JPY approaches its weekly low again after the ECB, attentive to Lagarde’s speech in search of a new impulse

• EUR/JPY meets a new offer on Thursday and approaches the weekly low again.
• Expectations of a hawkish turn by the BOJ support the yen and put some pressure.
• Intraday sales rebound after the announcement of the ECB’s monetary policy decision.

The EUR/JPY cross attracts fresh selling near 142.00 on Thursday and continues to lose ground until the middle of the European session. The pair weakens further below the round figure of 141.00 and falls to the lower end of the weekly range after the European Central Bank (ECB) announced its monetary policy decision.

As expected, the ECB raises key rates by 50 basis points at the end of the February policy meeting. The statement accompanying the decision indicated that the central bank intends to raise interest rates another 50 basis points in March. However, the ECB added that it will assess the further trajectory of policy and future rate decisions will remain data driven, following a meeting-by-meeting approach. This seems to be the only factor that could have disappointed Euro bulls and put further downward pressure on EUR/JPY.

The Japanese yen (JPY), on the other hand, is receiving support from expectations that high inflation could invite a more aggressive stance from the Bank of Japan (BoJ) later this year. Bets were boosted by the latest data, which showed that core inflation at the national level in Japan reached its highest annualized figure since December 1981. This further contributes to the offer tone surrounding the EUR/JPY cross and supports the prospects for additional losses. Market participants will now be watching the post-meeting press conference, where ECB President Christian Lagarde’s comments will weigh on the shared currency and provide some momentum for the cross.

Technical levels to watch