EUR/JPY turns sideways below 143.40 as focus shifts to ECB Laragde’s speech

• EUR/JPY is oscillating below 143.40 ahead of ECB Lagarde’s speech.
• ECB policymakers believe that current interest rates are near to neutral rate.
• The BOJ may look for more easing to accelerate the economy’s growth in times of lower inflation.

The EUR/JPY pair is displaying a lackluster performance in early Asia as investors are awaiting the speech from European Central Bank (ECB) President Christine Lagarde for fresh impetus. The cross is hovering around the critical hurdle of 143.40 and is likely to remain sideways amid the unavailability of a fresh trigger.

The speech from ECB President is going to provide fresh cues about the likely monetary policy action. Meanwhile, ECB policymakers delivered similar responses on interest rate guidance on Tuesday. ECB Chief Economist Phillip Lane is dubious about the inflation peak as it has been achieved or is still to come next year. He further added that he expects more rate hikes ahead but “a lot has been done already”.

While, Constantinos Herodotou, Governor of the Central Bank of Cyprus said that “There will be another hike in rates, but we are very near neutral rate.”

On the Japanese yen front, Bank of Japan (BOJ) Governor Haruhiko Kuroda is not ready to call for a termination of policy easing till wag inflation reaches around 3% to push inflation sustainably to the 2% target, as reported by Reuters. The BOJ is bound to keep flushing liquidity into the economy until the economy gets strengthened as desired.

For further guidance, the release of Japan’s Gross Domestic Product (GDP) data will provide significant cues. As per the projections, Japan’s GDP is expected to contract by 1.1% against the prior contraction of 1.2%. While the quarterly data is likely to contract by 0.3%, similar to the prior release. A contraction in Japan’s GDP in times when the economy is struggling to push inflation higher may force more policy easing measures by the BOJ.