EUR/JPY advances to near 137.00, focus shifts to ECB Lagarde’s speech

• EUR/JPY has advanced firmly to near two-day high near 137.00 on ECB’s Lagarde speech.
• A potential German energy crisis will continue to remain havoc for the Eurozone bulls.
• The BOJ will stick to its prudent policy even if inflation hits 3%.

The EUR/JPY pair has given an upside break of the consolidation formed in a narrow range of 136.37-136.80 in the early European session. The asset has refreshed its intraday high near 137.00 as investors are sensing optimism amid ongoing European Central Bank (ECB) Christine Lagarde’s speech in an interview with Madame Figaro.

In her speech, ECB’s Lagarde is favoring neo-globalization rather than opting for de-globalization. A state of neo-globalization indicates an environment of a minimal cost of investments and the entire focus remains on prosperity through the inter-transfer of technology, capital, and labor force among nations. Also, she added that “If more and more climate disasters, droughts, and famines occur throughout the world, there will be repercussions on prices, on insurance premiums, and on the financial sector,”.

Well, soaring fears for the energy crisis in Germany will continue to keep the shared currency bulls on the tenterhooks.  It is worth noting that Germany is a core member of the European Union (EU) and the energy crisis in Germany will have higher repercussions on the entire Eurozone.

On the Tokyo front, the yen bulls are expected to shift into the negative trajectory again for a prolonged period. The street believes that the Bank of Japan (BOJ) will not shift its ‘prudent’ stance to ‘neutral’ even if inflation hits 3%. Higher price pressures are not the sole criterion for halting liquidity injection into the economy. The labor cost index should be hiked firmly as higher payouts for goods and services due to a higher inflation rate will demand higher paychecks.