EUR/JPY eyes consolidation around 138.30 as investors await ECB’s Lagarde

• EUR/JPY is struggling to surpass the crucial resistance of 138.30 ahead of ECB Lagarde’s speech.
• Higher HICP numbers in the eurozone have raised the odds of a rate hike by the ECB.
• The yen bulls are underperforming despite upbeat employment data.

The EUR/JPY pair is attracting mild offers in the Asian session around 138.30 after a vertical upside move below 137.00. A rangebound move is highly expected from the market participants as investors are awaiting the speech from European Central Bank (ECB) President Christine Lagarde, which is due in the European session.

Investors should brace for a hawkish commentary from ECB’s Lagarde as inflationary pressures have reached the rooftop and the households are going to be the major victim of the mounting price pressures.

On Tuesday, the annual eurozone Harmonized Index of Consumer Prices (HICP) rose to 8.1% vs. the expectation of 7.7% and the prior print of 7.4%. A significant surge in the price rise is demanding an announcement of an interest rate hike by the ECB in its June monetary policy meeting. Considering the inflation figure above 8%, the ECB is needed to reverse its interest rate curve and elevate it in time. It is worth noting that the ECB has not hiked its interest rates since the pandemic, unlike the other Western leaders which are in mid-way of returning to neutral rates.

On the Japanese front, the Bank of Japan (BOJ) has witnessed failures in elevating inflation in its economy. BOJ Governor Harihuko Kuroda has stated that the price rise could only sustain above the benchmark if a wage hike is also being taken into consideration. The upbeat employment data released on Tuesday failed to support the yen bulls. The jobless rate improved to 2.5% against the prior print of 2.6%.