Ella 
EUR/JPY rose for a third day in a row, climbing to a three-and-a-half-week top during the first half of Thursday’s European session. EUR/JPY is currently trading around the 161.55-161.60 area, up over 0.25% on the day, with bulls looking to build momentum above the 50-day simple moving average (SMA).
Japan’s ruling Liberal Democratic Party (LDP) will elect a new president on Friday to replace outgoing Prime Minister Fumio Kishida, and uncertainty over Japan’s political situation has weakened the Japanese yen (JPY). In addition to this, the overall positive tone of the stock market has also weakened the relative safe-haven status of the yen, providing some support for the EUR/JPY cross.
However, upside for EUR/JPY remains limited as the euro retreats slightly. Dismal euro zone macro data this week strengthened the case for the European Central Bank (ECB) to cut interest rates by at least 25 basis points at its October meeting. This was a sharp departure from the hawkish expectations of the Bank of Japan (BOJ), causing the euro to suffer against the yen.
Investors appear confident the Bank of Japan will raise interest rates again before the end of the year. The Bank of Japan meeting minutes released earlier today once again confirmed this speculation. The minutes showed that board members unanimously believed that it was necessary to be wary of the risk of overshooting inflation and that it was appropriate to moderately adjust monetary support. This requires EUR/JPY bulls to remain cautious.
From a technical perspective, earlier this month, the 50-day simple moving average (SMA) crossed below the all-important 200-day SMA, forming a bearish “death cross” on the daily chart. This further suggests that it would be prudent to wait for strong follow-through buying before positioning EUR/JPY to continue its upward trajectory over the past two weeks or so.
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