- EUR/JPY builds on its intraday positive move after the BoJ manintains the staus quo.
- The BoJ left interest rates unchanged and also decided not to reduce bond purchases.
- Political uncertainty in Europe could undermine the Euro and cap gains for the cross.
The EUR/JPY cross attracts some dip-buying during the Asian session on Friday and reverses a part of the previous day's retracement slide from over a one-week high – levels beyond the 170.00 mark. The intraday positive move picks up pace after the Bank of Japan (BoJ) announced its policy decision, lifting spot prices to mid-169.00s, or a fresh daily peak in the last hour.
As was widely expected, the BoJ decided to leave interest rates unchanged at the conclusion of its June policy meeting and did not offer any cues about the timing of the next rate increase. Furthermore, the central bank might have disappointed some market participants anticipating an announcement regarding a potential reduction in the monthly bond purchases. This, along with a generally positive risk tone, undermines the safe-haven Japanese Yen (JPY) and provides a goodish lift to the EUR/JPY cross.
Meanwhile, a snap election call in France has sparked wider political concerns in the Eurozone. This might continue to act as a headwind for the shared currency and keep a lid on any meaningful appreciating move for the EUR/JPY cross. Hence, it will be prudent to wait for strong follow-through buying and sustained breakout through a short-term trading range held over the past two weeks or so before placing fresh bullish bets. Traders now look to comments by BoJ Governor Ueda Kazuo for a fresh impetus.
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