EUR/JPY saw a positive movement after the Bank of Japan (BoJ) decided to maintain its current interest rates and bond purchases, boosting the cross to mid-169.00s levels. This decision by the central bank, coupled with a positive risk sentiment, weakened the Japanese Yen and lifted the EUR/JPY pair. However, political uncertainty in Europe, specifically due to a snap election call in France, could hinder the Euro’s performance and limit gains for the cross.
The recent dip-buying in the Asian session on Friday helped reverse the retracement slide from a one-week high, pushing the EUR/JPY pair to fresh daily peaks. Market participants were on the lookout for clues about a potential reduction in monthly bond purchases from the BoJ. While the central bank did not offer any hints about a rate increase, the lack of information regarding bond purchases may have disappointed some investors. Despite this, the overall positive risk tone in the market continued to support the EUR/JPY pair.
The ongoing political concerns in the Eurozone, triggered by the snap election call in France, raise uncertainties about the Euro’s future performance. This may act as a barrier to significant upward movement for the EUR/JPY pair. Traders are advised to wait for strong follow-through buying and a sustained breakout above the short-term trading range before considering fresh bullish bets. Market participants are now keenly waiting for comments from BoJ Governor Ueda Kazuo for further direction.
In conclusion, the EUR/JPY pair experienced an intraday positive move following the BoJ’s decision to maintain interest rates and bond purchases. While the central bank did not provide any guidance on future rate hikes, the lack of clarity on bond purchases may have disappointed some market participants. Political uncertainties in Europe, particularly due to a snap election call in France, could impede the Euro’s performance and cap gains for the cross. It is advisable for traders to monitor market developments closely and wait for a sustained breakout before making any significant trading decisions.
