EUR/JPY EYES BELOW 135.00 AS YEN STRENGTHENS ON BOJ’S UNLIMITED BOND BUYING PROGRAM

• EUR/JPY sees more downside amid broader strength in the Japanese yen.
• BOJ’s unlimited bond-purchase program has fetched much-needed support for the yen.
• Euro may remain inactive ahead of ECB’s Lagarde speech.

The EUR/JPY pair is facing a decent correction amid a broader strength in the Japanese yen. The asset has surrendered its intraday gains and is off from the day’s high at 136.67. The cross is oscillating in a narrow range of 135.20-137.30 but is likely to imbalance on the downside.

The Japanese yen has been strengthened against the shared currency as the third day of the bond-buying program by the Bank of Japan (BOJ) has started providing much-needed support to the yen.  The pledge of unlimited bond-buying by the BOJ to defend the yield cap at 0.25% has progressed into the third day. The BOJ’s defense move of yield-curve control to safeguard its equities may report higher inflation in an already inflationary environment due to rising fuel and commodity prices.

Apart from the unlimited bond-buying program, the Japanese yen is performing despite downbeat Japan’s Retail Trade numbers in early Tokyo. The yearly Retail Trade was reported at -0.8% higher than the previous figure of -1.1% but extremely lower than the market estimate of -0.3%.

Meanwhile, the shared currency is likely to remain inactive as investors are waiting for the speech from the European Central Bank (ECB)’S Christian Lagarde, which is due on Wednesday. The speech from the ECB’s Lagarde will provide insights into the likely monetary policy action in April. Unlike the other Western leaders, the ECB is stuck with ground-level interest rates but a higher February inflation figure of 5.9% is calling for an interest rate hike in the coming monetary policy meeting.