Ella 
EUR/JPY came under renewed selling pressure on Thursday and stayed away from the previous day’s weekly high of around 161.45. However, spot prices rebounded nearly 100 points from the session low, with modest intraday losses, sitting just below the psychological 160.00 mark in early European trade.
The Japanese yen (JPY) gained some positive traction after a summary of opinions from the Bank of Japan’s (BoJ) July meeting showed that some members believe there is room for further interest rate hikes and policy normalization. In addition, concerns about economic downturns in the United States and China, as well as escalating geopolitical tensions in the Middle East, further supported risk aversion in the yen, which in turn put pressure on the EUR/JPY cross.
On the other hand, some selling around the dollar and better-than-expected German data this week – on factory orders and industrial production – provided some support for EUR/JPY. Still, the European Central Bank’s (ECB) pessimistic view on the euro zone’s economic outlook and expectations of further interest rate cuts before the end of the year may limit the euro’s upside.
With no market-moving economic data released on Thursday, it would be prudent to wait for strong follow-up buying before confirming that the EUR/JPY cross has bottomed, given the above fundamental backdrop. At the same time, continued strength and a break above the overnight swing high around 161.45 will lay the foundation for a good continuation of this week’s rebound from the 154.40-154.35 area (or the year’s low).
