• EUR/JPY picks up bids to reverse the previous day’s pullback from 10-week high.
• Strong inflation data from Spain, France join hawkish ECB talks to keep buyers hopeful.
• Incoming BoJ officials defend easy money policy to favor JPY bears.
• Preliminary readings of Germany’s HICP data for February eyed for fresh impulse.

EUR/JPY regains upside momentum past 144.00 as Tokyo opens on Wednesday. In doing so, the cross-currency pair picks up bids to dash the previous day’s U-turn from the highest levels since late December amid cautious optimism in the market.

That said, the quote reversed from the multi-day high on Tuesday as the Yen pair cheered mixed economics while struggling to respect overall hawkish comments from the incoming Bank of Japan (BoJ) officials. However, upbeat inflation data from France and Spain renewed the quote’s upside momentum afterward.

It should be noted that the incoming Bank of Japan (BoJ) Deputy Governor Shinichi Uchida testified before the Japanese parliament’s Upper House while defending the central bank’s easy money policy. In doing so, Uchida rules out hopes of altering the 2.0% inflation target, as well as hopes of bolstering the Yield Curve Control (YCC) policy.

Talking about the data, downbeat prints of Japan's Industrial Production (IP) for January contrasted with a welcome growth in the nation’s Retail Trade numbers but failed to provide any clear directions to the USD/JPY. That said, Japan’s IP shrunk 4.6% in January versus -2.6% expected and 0.3% prior growth. However, the Retail Trade grew 1.9% MoM on a seasonally adjusted basis from 1.1% prior and -0.2% market forecasts.

Elsewhere, preliminary readings of Spanish and French Consumer Price Index (CPI) details for February marked upbeat outcomes and bolstered the hawkish concerns surrounding the European Central Bank’s (ECB) next move, which is in contrast with the BoJ bias.

As a result, mostly downbeat Japanese data joins the monetary policy divergence between the ECB and the BoJ to keep the EUR/JPY buyers hopeful.

Moving on, a light calendar in Japan may allow the EUR/JPY bulls to keep the reins during early Wednesday. However, the first readings of Germany’s key inflation gauge for February, namely the Harmonized Index of Consumer Prices (HICP), could challenge the pair’s upside momentum on missing the upbeat 0.7% MoM forecasts, versus 0.5% prior.

Technical analysis

Unless providing a daily close below the 100-day Exponential Moving Average (EMA), around 142.10 by the press time, the EUR/JPY pair appears capable of crossing the downward-sloping resistance line from late October 2022, close to 144.50 at the latest.