EUR/JPY balances above 138.00, downside looks likely on escalating recession fears

• EUR/JPY is attempting to hold itself above 138.00 after a rebound from 137.27.
• The shared currency bulls are worried over the gas supply tensions between the UK and Europe.
• The BOJ is worried over the muted wage-price hike as it may restrict the inflation rate.

The EUR/JPY pair is displaying a lackluster performance in the Tokyo session. The cross is trading back and forth in a narrow range of 138.26-138.60 after a rebound from Wednesday’s low at 137.27. On a broader note, the asset is in the grip of bears. The pair is declining over the past week after failing to cross the four-week-old resistance at 144.00.

The odds of a recession situation in the eurozone are accelerating firmly after the pessimist statement from the Bank of England (BOE) on the global outlook. The BOE believes that volatility in the oil and raw-material prices may bring economic shocks in the future. A gloomy outlook by a Western central bank is itself a negative for the FX domain. No doubt, the impact of the economic shocks will have adverse effects on the eurozone too as it has prohibited oil from Russia.

Apart from the recession fears, the gas supply tensions between Europe and the UK economy are haunting the shared currency bulls. The UK administration announced that the economy will stop supplying gas to mainland Europe if it hits shortages in the coming months.

On the Tokyo front, the Bank of Japan (BOJ) is worried about the underperformance of the wage-price concept. The BOJ believes that wage prices are needed to be hiked in order to keep the inflation rate near the desired levels. Otherwise, the households will face the heat of higher price pressures and aggregate demand will tumble quantity-wise.