During early Monday, EUR/JPY currency pair bulls pushed the cross-currency pair to a 15-year high of 150.60, disregarding the retreat in the European Central Bank’s (ECB) hawkish bias ahead of the bloc’s central bank’s monetary policy meeting, which was mainly due to downbeat data. The latest run-up of the cross-currency pair was supported by hopes of continued easing by the Bank of Japan (BoJ), downbeat US Treasury bond yields, and the US government’s efforts to address the banking crisis.

Following an exodus of withdrawals and a slump in the First Republic’s share price, the Federal Deposit Insurance Corporation (FDIC) called for bids for the troubled US bank, with multiple top-tier private organizations, including JP Morgan, taking part. However, the results, which are yet to be released, can offer only knee-jerk optimism, as a private player’s immediate defence of the bank is not a solution to the broad banking problems. The same raises fears of such actions for the larger public banks in the future, thereby keeping the risk-off mood intact.

On Friday, the BoJ held its current monetary policy unchanged, as expected. At the same time, the newly appointed Governor, Kazuo Ueda, emphasized the need to continue monetary easing to achieve the 2% inflation target with wage growth. The BoJ dropped its forward guidance for interest rates and launched a review of its policies that will take more than a year.

Meanwhile, ECB hawks retreated amid downbeat EU and German statistics released last week. On Friday, preliminary readings of Germany’s inflation for April, as per the Harmonized Index of Consumer Prices (HICP), eased to 7.6% YoY versus 7.8% expected and prior. The nation’s inflation per the Consumer Price Index (CPI) also softened to 7.2% YoY compared to 7.3% market consensus and 7.4% previous readings.

Furthermore, the first readings of the Eurozone Gross Domestic Product (GDP) for the first quarter (Q1) of 2023 showed mixed results for QoQ and YoY. The Eurozone Q1 GDP improved to 0.1% QoQ from 0.0% prior, versus 0.2% expected, while the yearly growth eased to 1.3% from 1.4% market forecasts and 1.8% prior. Similarly, Germany’s Q1 GDP improved quarterly to 0.0% from -0.4% prior and 0.2% analyst estimations, while the yearly figures dropped to -0.1% from 0.9% previous readings and 0.3% market forecasts.

Trade Idea

Despite the ECB’s retreat and downbeat EU and German statistics, EUR/JPY bulls continue to dominate, pushing the pair to a 15-year high of 150.60. The pair remains well-supported with hopes of continued easing by the BoJ and downbeat US Treasury bond yields. A long position with a target of 152.00 and a stop loss at 149.50 could be considered.