EUR/JPY recovery fails at 183.65 despite easing intervention fears

The Euro nudged up from six-week lows, right below 182.00 against the Yen on Tuesday, as convictions about a BoJ-Fed intervention start to fade, but met resistance at the 183.65 area before pulling back to levels right below 183.00 at the time of writing.

The Japanese Yen is trimming recent gains against most peers, although it remains well above last week's lows. The line on the sand for the market is the 160.00 level, and, in that sense, the current prices have calmed market fears of an imminent intervention, while concerns about Japan’s fiscal stability returned to the table.

Investors sold the Yen across the board last week, after Prime Minister Sanae Takaichi dissolved the lower house and called snap elections on February 8. The market is fearing that her growing popularity will give her stronger parliamentary support to pursue her policies of big spending and lower taxes, adding pressure to the country’s already strained finances.

News that the Fed and the BoJ requested USD/JPY rates by major banks on Friday, a precedent of an intervention, put investors on their heels and sent the Yen soaring across the board. 

In Europe, German IFO Business Climate data disappointed on Monday. On Tuesday, ECB President Christine Lagarde will take the stage, but she is unlikely to say anything new on monetary policy.