Market Analysis
The EUR/JPY pair experiences renewed selling pressure on Thursday, retreating from the weekly high of around 161.45 reached the previous day. Despite this, spot prices rebounded nearly 100 pips from the daily low and traded with modest intraday losses, just below the psychological level of 160.00 during the early European session.
The Japanese Yen (JPY) gains positive momentum after the Bank of Japan’s (BoJ) summary of opinions from the July meeting indicated that some members are open to further rate hikes and policy normalization. Additionally, concerns over economic downturns in the US and China, along with rising geopolitical tensions in the Middle East, bolster the safe-haven appeal of the JPY, putting pressure on the EUR/JPY pair.
Conversely, the Euro benefits from some support due to selling pressure on the US Dollar (USD) and better-than-expected German economic data released this week, including Factory Orders and Industrial Production figures. However, the European Central Bank's (ECB) pessimistic outlook on the Eurozone's economic prospects and expectations for further interest rate cuts this year may limit the Euro's gains.
In the absence of significant economic releases on Thursday, the prevailing fundamental conditions suggest it is wise to await strong follow-through buying before confirming that the EUR/JPY pair has bottomed out. Meanwhile, sustained strength beyond the overnight swing high of around 161.45 could pave the way for extending this week's recovery from the year-to-date low in the 154.40-154.35 region.
Paraphrasing text from "FX Street" all rights reserved by the original author.