EUR/JPY retreats from a six-week high, trades near 159.60

• EUR/JPY loses ground amid the positive remarks on BoJ from the OECD.
• OECD Secretary-General Cormann expressed confidence that inflation will more persistently align with BoJ’s target.
• ECB Vice President Luis de Guindos mentioned that ECB’s future policy decisions will be data-dependent.

EUR/JPY pulls back from its six-week high at 160.00, retracing its recent profits registered on Wednesday. The EUR/JPY pair trades lower near 159.60 during the Asian session on Thursday. The remarks from Organisation for Economic Co-operation and Development (OECD) Secretary-General Mathias Cormann regarding the Bank of Japan’s (BoJ) monetary policy could offer some support to the Japanese Yen (JPY).

Secretary-General Cormann conveyed a relatively optimistic outlook, suggesting confidence that inflation will more persistently align with the Bank of Japan’s (BoJ) target. He expressed the view that Japan’s monetary policy can gradually and modestly initiate tightening. Although inflation is anticipated to decelerate throughout the year, wage pressures are expected to sustain it close to the BoJ target. Considering the prolonged period of very low inflation or deflation over several decades, Cormann acknowledged the BoJ’s diligence in gathering all relevant data to assess the appropriate level of monetary policy tightening.

On the other side, European Central Bank (ECB) Vice President Luis de Guindos, speaking as scheduled on Wednesday, noted that the rapid pace of disinflation witnessed in 2023 is expected to decelerate in the current year. He mentioned the growth outlook is less favorable, with disappointing developments. De Guindos highlighted the uncertainty in the future and pointed to the possibility of a technical recession in the second half of 2023 as indicators pointed to an economic contraction in December. De Guindos emphasized that future decisions by the ECB will continue to be dependent on data.

On Thursday, the Japanese Cabinet Office revealed the preliminary Coincident Index for November. The index showed a contracted reading of 114.5 from the October’s figure of 115.9. ECB will publish its Economic Bulletin later in the day. Traders will likely observe German Current Account data as well.