EUR/JPY surpasses 148.00 despite BOJ's covert assistance; ECB/BOJ policy is in the spotlight

In the early Tokyo session, the EUR/JPY pair is inching toward the immediate resistance level of 148.00. The asset has surpassed the low-impact barrier of 147.40 and is climbing higher despite the headwinds of the Bank of Japan's (BOJ) covert involvement in the currency markets and speculative swings against the Japanese yen.

The risk profile is quite optimistic as the S&P500 has posted big gains in three straight trading sessions. Notable is that the cross has surpassed the Monday knee-jerk reaction of 147.40 and is now around 143.72. Monday, National Australia Bank (NAB) analysts in Sydney stated, "It's blindingly evident that the BOJ is intervening." Therefore, the Monday knee-jerk reaction may have been caused by the BOJ's involvement in the currency markets.

Moving forward, investors are focusing their attention to the BOJ's interest rate announcement. In light of the shocks to foreign demand, BOJ Governor Haruhiko Kuroda would maintain an ultra-loose monetary policy to stimulate the growth outlook. In addition, Japanese officials are concerned that the inflation rate could fall back below 2%; hence, a policy that is exceedingly lax is the best option.

The European Central Bank (ECB) is expected to announce a second successive 75 basis point (bps) rate hike, according to Rabobank analysts. ING economists have likewise endorsed projections of a 75 basis point rate increase. In addition, they feel that the increase will not provide meaningful and enduring support for the euro.

Germany's Economy Minister Robert Habeck stated on Tuesday, in reference to the European energy crisis, that they "anticipate the gas price mechanism resolution at the next EU Council." He continued, "Joint EU purchases are the most effective method to keep gas prices low."