EUR/JPY rebounds from 159.20 on slightly upbeat preliminary Eurozone GDP data

• EUR/JPY bounces from 159.20 as Eurozone preliminary GDP remains slightly better than estimates.
• The Eurozone economy manages to avoid a technical recession.
• BoJ Ueda is not convinced for exiting from expansionary monetary policy due to slower wage growth.

The EUR/JPY discovers buying interest near 159.20 as the Eurostat has reported better-than-anticipated Gross Domestic Product (GDP) data for the last quarter of 2023. The agency has reported that the Eurozone economy remained stagnant against expectations and the prior reading of a 0.1% de-growth in GDP figures.

On an annualized basis, the Eurozone economy grew slightly by 0.1% while investors anticipated a stagnant performance. This indicates that the economy has managed to avoid a technical recession. It would allow the European Central Bank (ECB) to hold the Main Refinancing Operations Rate at 4.5% for a longer period.

Meanwhile, investors keen to know when the ECB will start reducing interest rates. ECB President Christine Lagarde said earlier that inflation is higher than what the ECB want and rate-cuts could start by late Summer. ECB policymaker Mario Centeno argued that the central bank should start cutting rate sooner than later, while avoiding abrupt moves. On the contrary, ECB Governing Council member Peter Kazimir said that a rate cut in June is more likely than April.

On the Tokyo front, investors await the Bank of Japan’s (BoJ) Summary of Opinions (SOP), which will be released on Wednesday. Investors will keenly focus on signals about an exit from the decade-long ultra-loose monetary policy.

BoJ Governor Kazuo Ueda seems reluctant in policy normalization as wage growth is insufficient to keep price pressures above the required rate of 2%.