Ella 
The EUR/JPY cross rose to the 169.20 area in early Asian trading on Wednesday, attracting new sellers and moving lower for the third consecutive day. EUR/JPY maintained its downward trajectory, with fresh buying of the yen pushing the pair to its lowest level since June 17 near the 168.35-168.30 area.
Bets that the Bank of Japan (BoJ) may raise interest rates again at its upcoming policy meeting continued to support the yen amid suspected intervention by Japanese authorities. Toshimitsu Motegi, an official from Japan’s ruling Liberal Democratic Party, raised market expectations with comments overnight that the BoJ should make clear its determination to maintain monetary policy normalization, including through steady rate hikes.
In addition, global risk sentiment deteriorated slightly, as evidenced by weakness in global equities, which favored the safe-haven yen and put further pressure on the EUR/JPY cross. In addition, the European Central Bank’s bearish outlook for the eurozone economy and falling inflation expectations weighed on the EUR/JPY, with the prospect of a rate cut in September still hanging in the balance.
This, coupled with the fact that EUR/JPY continued to break through the psychological 170.00 level overnight, favors bearish traders and suggests that the EUR/JPY cross has the least resistance to the downside. Therefore, there is a high probability that EUR/JPY will then fall below the 168.00 round mark, fall to the 100-day simple moving average (SMA) support level around 167.80, and then fall to the mid-167.00 level, which is the low of the monthly range in June.
On the economic data front, the Japanese manufacturing purchasing managers’ index (PMI) for July released by Au Jibun Bank showed that Japanese manufacturing activity unexpectedly contracted in July. However, the strength of the service industry largely offset this disappointing data, which provided little noticeable boost to the EUR/JPY cross. Looking ahead, market participants now look forward to the preliminary reading of the Eurozone Purchasing Managers’ Index for short-term trading opportunities.
