EUR/JPY consolidates near its highest level since September 2008 just below 158.00

• EUR/JPY reverses its modest intraday decline and is back near its high in almost 15 years.
• The hawkish comments from ECB officials benefit the common currency and provide some support for the pair.
• Intervention fears prevent bulls from entering aggressive positions and limit the pair’s gains.

The crossing USD/JPY it attracted some buying near the 157.45-157.40 zone on Wednesday and has now recouped a significant portion of its modest intraday losses. The pair It is getting closer and closer to the 158.00 level and is currently trading near the highest level since September 2008.reached on Tuesday.

The common currency is based on the Hardline comments from European Central Bank officials (ECB), which in turn act as a tailwind for the EUR/JPY cross. In fact, the vice-president of the ECB, Luis de Guindos, said that the July rate hike is set and added that there is more ground to cover in terms of rates, although the movement of September will depend on the data. Elsewhere, Madis Muller, the ECB’s head of monetary policy, noted that risks to inflation remain on the upside and that it is too early to say where rates will end.

This affirmation occurs after the declarations of the president of the ECB, Christine Lagarde, in which she stated that inflation in the euro zone had entered a new phase that could continue for some time. Lagarde further noted that it is unlikely that in the near future the ECB will be able to say with complete certainty that the maximum rates have been reached. By contrast, the Governor of the Bank of Japan (BoJ), Kazuo Ueda recently ruled out the possibility of any changes to the ultra-loose policy setup or to alter the control measures of the yield curve.

Bank of Japan dovish stance coupled with prevailing risk appetite weaken Japanese Yen (JPY) and support the EUR/JPY cross. However, speculation that the Japanese authorities could step in again to support the national currency is helping to limit the Yen’s losses. Indeed, Japan’s Finance Minister Shunichi Suzuki stated on Tuesday that they will watch the foreign exchange market with a sense of urgency and respond appropriately if currency movements prove excessive. The warning was reiterated by Masato Kanda, Japan’s top currency diplomat, earlier on Wednesday, which appears to limit the cross’s gains.

Market participants also appear to have stayed on the sidelines ahead of the ECB President’s appearance, christine lagardeand the Governor of the Bank of Japan, kazuo ueda, at the ECB Forum on Central Banking, in Sintra. Meanwhile, concerns about economic difficulties stemming from rapidly rising borrowing costs prevent traders from taking aggressively bullish positions around the common currency and help cap the EUR/JPY cross. However, the fundamental undercurrent favors the bulls and suggests that the path of least resistance remains to the upside.

EUR/JPY technical levels to watch