The EUR/JPY is expected to rise beyond 142.00 despite the BOJ's upcoming plans to tighten monetary policy
EUR/JPY aims to cross 142.00 as wage inflation in the Eurozone may necessitate additional policy tightening. ECB Centeno anticipates that the present phase of interest rate hikes is nearing its conclusion. Following the nomination of a new BOJ Governor, Japan may seek an exit from its ultra-lax monetary policy.

In the early Asian session, the EUR/JPY pair is trying to extend its upward excursion over the immediate resistance of 142.00. In light of the optimistic market sentiment, the cross is likely to maintain its positive trajectory despite its sideways shape.
After European Economic Affairs Commissioner Paolo Gentiloni lowered the GDP contraction projection for the Eurozone, the Euro propelled the cross to a strong 142.00. (GDP). Gentiloni remarked in an interview with the Italian newspaper Il Sole 24 Ore that he anticipates the Eurozone's GDP contraction will be less severe than anticipated in November.
He continued, "The 0.3% projection still seemed pretty robust, but many variables indicated that the expected decline in the fourth quarter of 2022 and the first quarter of this year would not be as severe as anticipated."
Reuters reported on Tuesday that Mario Centeno, a member of the governing council of the European Central Bank (ECB), stated that the present process of interest rate increases is nearing its conclusion. Centeno anticipates that the persistent price index will encounter resistance in January and February, but will begin to decline in March.
Contrary to the opinion of ECB Centeno, the Economic Bulletin published by the ECB makes it abundantly clear that wage growth will be exceptionally robust in the future, driven by robust labor markets that have not yet been significantly impacted by an economic slowdown, increases in national minimum wages, and some catch-up between wages and high inflation rates. Wage inflation is becoming an obstacle for central banks in achieving price stability, and it may force Christine Lagarde, president of the ecb Central Bank, to maintain a restrictive stance going forward.
After naming a new Bank of Japan (BOJ) governor in April, Japanese Prime Minister Fumio Kishida stated that his administration and the central bank must reconsider their relationship in steering economic policy. He noted that the administration intends to alter its multi-decade strategy for combating deflation and may seek an exit from ultra-loose monetary policy.
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