• EUR/JPY trades with a negative bias for the third successive day, though lacks follow-through.
• Fresh worries about a global economic downturn benefit the JPY and exert some pressure.
• Bets for more ECB rate hikes in the coming months underpin the Euro and help limit losses.

The EUR/JPY cross drifts lower for the third successive day and drops to a multi-day low during the first half of trading action on Wednesday. Spot prices, however, recover a few pips during the early European session and bounce back to the 149.00 mark in the last hour.

Worries about a global economic downturn continue to weigh on investors' sentiment, which benefits the safe-haven Japanese Yen (JPY) and exerts some downward pressure on the EUR/JPY cross. The concerns were fueled by weaker Chinese macro data, showing that the trade surplus sank to a 13-month low in May in the wake of a surprise slump in exports. This, in turn, suggested that overseas demand for Chinese goods remained weak and posed additional headwinds for the world's second-largest economy.

Apart from this, the prospect of Japanese authorities intervening in the markets might further underpin the JPY and contribute to offered tone surrounding the EUR/JPY cross. The shared currency, on the other hand, is pressured by discouraging German Industrial Production figures, French Trade Balance and French Trade Balance. That said, a big divergence in the monetary policy stance adopted by the Bank of Japan (BoJ) and the European Central Bank (ECB) holds back bears from placing fresh bets around the EUR/JPY cross.

Against the backdrop of the recent hawkish comments by several ECB officials, President Christine Lagarde said earlier this week that there is no clear evidence that underlying inflation has peaked. This, in turn, reaffirms expectations that the ECB is not done raising rates despite the recent fall in consumer inflation. It is worth recalling that the headline Eurozone CPI decelerated more than anticipated, to the 6.1% YoY rate in May from the 7.0% previous and the Core CPI slowed from the 5.6% YoY rate in April to 5.3% last month.

The aforementioned fundamental backdrop seems tilted in favour of the Euro bulls and supports prospects for the emergence of fresh buying around the EUR/GBP cross. Hence, any meaningful downside is more likely to remain limited, at least for the time being.