• EUR/JPY has continued its sideways movement around 143.00 as the spotlight has shifted to the BOJ policy.
• Depreciating yen will force the BOJ to adopt a neutral approach toward the monetary policy.
• Eurozone’s Consumer Confidence is seen lower at -26 vs. -24.9 reported earlier.

The EUR/JPY pair is displaying back-and-forth moves in a narrow range of 143.00-143.26 in the early European session. The asset has turned sideways as investors are awaiting the release of the interest rate decision by the Bank of Japan (BOJ), which will release on Thursday.

The depreciating yen is becoming a nightmare for the Japanese economy, the BOJ’s officials are preparing for an intervention in the Fx moves in seldom without discussing with the remaining G-7 central banks. Japanese officials believe that the current yen position doesn’t justify its fundamentals.

As BOJ is worried about the depreciating yen, the central bank is expected to shift its stance initially in its scheduled monetary policy on Thursday. BOJ Governor Haruhiko Kuroda will restrict himself from announcing any stimulus package and will end its prolonged ultra-loose monetary policy. A neutral approach is expected to be followed as subdued growth prospects and lower inflation rates do not favor an aggressive approach.

Before the mega event, the release of Japan’s National Consumer Price Index (CPI) will be of utmost importance. The headline CPI is seen to stabilize at 2.6% while the core CPI that excludes oil and food bills will accelerate significantly to  1.7%, 50 basis points (bps) higher than the prior release.

On the Eurozone front, investors are awaiting the release of Thursday’s Consumer Confidence data.  The economic data is seen lower at -26 against the prior release of -24.9. Consumers are upset over the inflation chaos and signs of failure by the European Central Bank (ECB) in dealing with the same. A decline in consumer confidence indicates a loss of confidence in the economy. This is the outcome of bleak growth prospects, soaring inflation, and deepening energy prices.