EUR/JPY recovers few pips from daily low, keeps the red around mid-163.00s

• EUR/JPY struggles to capitalize on Monday’s recovery from a nearly one-month low.
• Intervention fears and geopolitical risks revive demand for the JPY and exert pressure.
• The BoJ rate-hike uncertainty cap gains for the JPY and helps limit losses for the cross.

The EUR/JPY cross meets with a fresh supply during the Asian session on Tuesday and reverses a part of the previous day's recovery move from the 50-day Simple Moving Average (SMA), around the 162.25 region, or a nearly one-month low. The intraday slide is sponsored by the emergence of fresh buying around the Japanese Yen (JPY) and drags spot prices back closer to the 163.00 mark in the last hour, though lacks follow-through.

Geopolitical tensions escalated after the Biden administration approved Ukraine’s use of long-range US weapons deeper inside Russia, which has deployed North Korean troops to reinforce its war. This, along with speculations that Japanese authorities will intervene in the FX market to prop up the domestic currency, turn out to be key factors undermining the safe-haven JPY and exerting some downward pressure on the EUR/JPY cross.

The shared currency, on the other hand, struggles to lure buyers amid bets for more aggressive rate cuts by the European Central Bank (ECB) on the black of a bleak Eurozone economic outlook. Adding to this, US President-elect Donald Trump's protectionist policies pose additional threats to the Eurozone economy. This might continue to weigh on the Euro and suggests that the path of least resistance for the EUR/JPY cross is to the downside. 

That said,  the uncertainty over the timing of another interest rate hike by the Bank of Japan (BoJ) could act as a headwind for the JPY amid a generally positive risk tone. This, in turn, could assist the EUR/JPY cross to attract some dip-buyers and help limit the downside near the 50-day SMA. The said support should act as a key pivotal point, which if broken should pave the way for the resumption of the recent corrective slide from a multi-year top.