EUR/JPY moves above 173.00, reacts positively to Le Pen’s National Rally’s sweep

• EUR/JPY gains upside traction as sentiment improves to the far-right sweep in the first round of the French election.
• HCOB Eurozone Manufacturing PMI was revised higher to 45.8 in June but remained below the survey average of 51.6.
• The Japanese Yen may limit its downside as an upbeat Japan’s business confidence data lifts market sentiment.

EUR/JPY continues its winning streak for the fourth consecutive day, trading around 173.30 during the European session on Monday. The Euro has gained upside traction as the traders reacted positively to the far-right sweep in the first round of the French snap election on Sunday.

Marine Le Pen’s National Rally confirmed its status as France’s leading political force, marking the highest turnout in three decades. While Le Pen’s party secured a clear but not definitive victory, uncertainty prevails ahead of the second round of voting on July 7, as reported by France 24.

HCOB Eurozone Manufacturing PMI was revised higher to 45.8 in June from a preliminary estimate of 45.6. Still, the PMI remains well below the survey average of 51.6, with output contracting at the fastest rate so far this year. European Central Bank (ECB) Governing Council member Olli Rehn suggested last week that the central bank might cut interest rates twice more this year.

In Japan, upbeat Japan’s business confidence data lifts market sentiment, which might support the Japanese Yen, limiting the upside of the EUR/JPY cross. Japan’s Tankan Large Manufacturing Index rose to 13 in the second quarter from the previous reading of 11. The index hit the highest level in two years amid an improving economic outlook. Meanwhile, Japan’s Jibun Bank Manufacturing PMI for June was revised slightly lower to 50 from a preliminary reading of 50.1 but remained expansionary for the second straight month.

Additionally, the expected speculations about an imminent intervention by Japanese authorities also support the JPY. Reuters reported on Friday that Japanese Finance Minister Shunichi Suzuki said that the authorities were "deeply concerned" about the impact of "rapid and one-sided" foreign exchange moves on the economy. Suzuki added that excessive volatility in the currency market is undesirable and that authorities will respond appropriately to such moves.