Ella 
EUR/JPY traded within a tight range in Asia on Wednesday.
EUR/JPY struggled to gain any meaningful traction on Wednesday and oscillated around the 157.00 mark in Asia. Spot prices, however, remained near Tuesday’s more than two-week high around the 157.75 area.
The overall weakness in the stock market has prompted some safe-haven funds to flow into the yen and has become a key factor that is bearish for EUR/JPY. However, the dollar’s moderate decline provided some support for the euro and limited its losses, at least temporarily. Meanwhile, fundamentals are slightly in favor of bullish traders and support short-term gains.
A more dovish stance from the Bank of Japan could continue to weaken the yen and strengthen the positive outlook for EUR/JPY. Indeed, the Bank of Japan’s “Summary of Opinions” released on Monday showed policymakers support the need to patiently continue the current monetary easing to achieve the price stability goal. Separately, data on Tuesday showed that real wages in Japan fell for the 15th straight month in June.
It is worth recalling that the BOJ has emphasized that sustainable wage increases are a prerequisite for considering an exit from easing and the removal of massive monetary stimulus. This represents a wide divergence from other major central banks, including the European Central Bank (ECB), suggesting the least resistance to the upside in EUR/JPY crosses. Still, speculation that the ECB may halt its nine-time streak of rate hikes in September appeared to limit gains.
As such, it would be prudent to wait for some follow-through buying from overnight choppy highs before positioning for a sharp recovery from the multi-week lows hit in July in the near term. At that point, the EUR/JPY cross could make another attempt to break the 158.00 mark, the highest level since September 2008, and extend its long-established bullish trend.
