With the BOJ expected to adopt a neutral approach, watch for EURJPY to fall further below 143.00

Japanese companies that rely on imports are exposed to currency risks

The European Central Bank will raise interest rates sharply to stabilize prices

Eurjpy encountered resistance near 143.40 after a slight rebound in the early Asian session. The asset fell sharply after it failed to recover key resistance 144.47 on Tuesday. The cross is expected to accelerate after breaking below the previous week's low of 142.30. Selling pressure on the asset is rising as investors anticipate a shift in the Bank of Japan's monetary policy approach.

There is no denying that the Japanese economy is experiencing severe pain from the depreciation of the yen. The impact is growing and is affecting companies that rely on imported inputs. Higher exchange rate risk leads to higher input costs, while failure to pass on the impact to end consumers forces companies to shut down or reduce capacity utilisation. As the third-quarter earnings season gets under way, the cumulative impact will start to be felt.

With Japanese officials planning currency intervention to support the plunging yen, the Bank of Japan's neutral approach to monetary policy looks profitable. Price pressures are also showing some strength, so the constraints on announcing more stimulus will support the yen. In addition, BOJ Governor Haruhiko Kuroda's neutral guidance on interest rate policy could provide a cushion for the yen.

In the eurozone, European Central Bank President Christine Lagarde clarified in her speech that the central bank will further raise interest rates. The ECB does not want an inflationary mess to settle in the trading bloc's economic behaviour. Looking ahead, consumer confidence data will also influence euro bulls. The economic data is expected to fall to -25.8 from -24.9.