Ella 
The EUR/JPY cross failed to capitalize on the previous day’s rebound from levels just below the psychological 165.00 mark and attracted fresh sellers on Thursday. Spot prices continued to be subdued during the first half of the European trading session, currently trading around the 165.70-165.65 area, but lacked follow-through and remained confined to the familiar range of the past week or so.
The USD/JPY pair surged on Wednesday following Donald Trump’s victory in the US election, prompting verbal intervention from Japanese authorities. This has led to some loosening of bearish positions around the Japanese yen (JPY), which has in turn put bearish pressure on the EUR/JPY cross. Nonetheless, uncertainty over the Bank of Japan’s (BoJ) interest rate hike plans has inhibited any meaningful appreciation of the yen.
Investors appear to believe that Japan’s political landscape may make it difficult for the Bank of Japan to further tighten monetary policy. Separately, government data released on Thursday showed that Japan’s inflation-adjusted wages fell for a second straight month in September, raising questions about when the Bank of Japan will raise interest rates again. This, coupled with risk appetite, capped the rise in the safe-haven currency JPY and provided support for EUR/JPY.
On the other hand, the euro was also supported by bets on a less dovish European Central Bank (ECB). Indeed, data released last week showed euro zone inflation rose to 2% in October. This, coupled with better-than-expected GDP growth data from the euro zone’s largest economy, suggests the ECB will stick with a 25 basis point (bps) rate cut at its December meeting, helping to limit the downside for the EUR/JPY exchange rate.
Even from a technical perspective, the range-bound price action could still be classified as a bullish consolidation phase due to the recent break above the all-important 200-day moving average (SMA). This, in turn, suggests that the path of least resistance for EUR/JPY is to the upside. Therefore, any subsequent decline may still be viewed as a buying opportunity, and the cushion is more likely to remain.
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