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EUR/JPY Faces Resistance Near 148.00 Following a Recovery Move Advance Of Eurozone Retail Sales
Ahead of Eurozone Retail Sales, the EUR/JPY is having difficulty regaining ground above 148,000. ECB Lagarde announced 'loud and clear' that additional rate increases numbering more than one are imminent. A withdrawal by the Bank of Japan from its ultra-lax monetary policy could lead to a broader recovery in the Japanese Yen.
During the Asian session, the EUR/JPY pair struggles to extend its recovery above the immediate resistance of 148.00. The cross is under pressure as investors anticipate the April release of Eurozone Retail Sales data.
The Euro suffered significant losses on Thursday after the European Central Bank (ECB) ended the suspense by increasing interest rates by 25 basis points (bps) to 3.25 percent. The ECB ended its string of 50-bps rate hikes and opted for a modest rate hike as the Eurozone economy responded positively to monetary policy.
Amid a sluggish Eurozone growth rate and a decline in credit disbursements from Eurozone commercial banks, the ECB opted for a smaller interest rate increase. Firms are struggling to cope with higher financing costs and a bleak economic outlook.
Nonetheless, in the monetary policy statement, ECB President Christine Lagarde proclaimed 'loud and clear' that additional rate hikes are on the horizon as the fight against persistent inflation is far from over.
In the future, Eurozone Retail Sales will be closely monitored. According to estimates, monthly Retail Sales have been stagnant compared to a 0.8% decline in March. The annual decline in retail demand is anticipated to increase to 3.1% from the previous 3.0%.
On the Japanese Yen front, investors believe that a withdrawal from the Bank of Japan's (BoJ) ultra-loose monetary policy could lead to a broader recovery in the Japanese Yen. However, falling consumer inflation expectations in Japan force the Bank of Japan to maintain an expansionary stance.
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