EUR/JPY Surpasses 149.50 As The ECB Raises Interest Rates Despite a Decline In Eurozone Inflation

During the Asian session, the EUR/JPY pair ascended above the immediate resistance level of 149.50. Despite the softening of Eurozone inflation in May, hawkish European Central Bank (ECB) bets remain strong, so the cross is seeking to extend its upside.

Following a sharp deceleration in Germany, France, and Spain's inflation, Eurozone inflation carried the trend forward and reported lower-than-anticipated Harmonized Index of Consumer Prices (HICP) figures, as individuals sacrificed indulgences in response to rising cost of living. Monthly headline HICP remained unchanged compared to the previous expansion of 0.6%, while annual HICP slowed significantly to 6.1% from 6.3% and the previous release of 7.0%.

In addition, monthly core inflation expanded by 0.2% at a significantly slower rate than anticipated (0.8%). The annual core HICP decreased to 5.3% from the projected 5.5%. The ECB's policymakers continue to be concerned about the persistence of core inflation.

Investors were divided on whether or not the ECB would contemplate a pause in monetary policy at its June meeting due to a slowdown in Eurozone inflationary pressures and Germany's recession. Nonetheless, ECB President Christine Lagarde stated during a Thursday appearance, "We need to continue our hiking cycle until we are sufficiently confident that inflation is on track to return to our target in a timely manner."

On the Japanese Yen front, a volatile response is anticipated as the Bank of Japan (BoJ) is anticipated to adjust its Yield Curve Control (YCC) to maintain inflation above 2%. Additionally, BoJ Governor Kazu Ueda stated that operations to purchase bonds will continue.