• EUR/JPY retreated to a daily low near the 149.60 area.
• Euro weakened against the JPY on the back of falling government bond yields.

EUR/JPY trades with mild losses, hovering around the 149.75 area. Data from the Euro zone showed a negative Gross Domestic Product revision to Q1 figures. On the other hand, Japan also reported weak GDP figures on the Asian session but falling German and American yields seem to be favouring the JPY.

German yields decline following EZ Q1 GDP data

Eurostat released that the Gross Domestic Product (GDP) for the Eurozone in Q1 contracted by 0.1% QoQ while markets expected a stagnation. On the other hand, the annualized growth rate of the GDP came in at 1% vs the consensus of 1.2%.

Taking this into consideration, the German yields have declined across the curve as weak economic data from the EZ makes investors think that the European Central Bank (ECB) may not be obliged to continue hiking rates following next week’s meeting where a 25 basis points (bps) hike its already priced in. In that sense, the 10-year bond yield fell to 2.42% seeing a 1.06 % drop on the day, while the 2-year yield sits at 2.94% with a 1.17% slide and the 5-year yielding 2.43% with a 1.06% decline respectively.

On the other hand, Japan's Cabinet Office revealed that the country's Gross Domestic Product (GDP) unexpectedly contracted by 0.3% in Q1, falling short of the anticipated 0.5% expansion. However, the annualized rate showed a positive growth of 2.7% compared to the previous 1.6%. Adding to this, weak economic activity data from Japan may fuel a more dovish stance from the Bank of Japan (BoJ) and hence, continue to weigh on the domestic currency