EUR/JPY edges lower below 174.50 amid fear of FX intervention

• EUR/JPY weakens to nearly 174.20 in Thursday’s Asian session. 
• The fear of FX intervention from Japanese authorities supports the JPY and drags the cross lower.
• The outcome of second round vote of the French parliamentary elections on Sunday might add volatility to the EUR.

The EUR/JPY cross trades on a weaker note around 174.20, snapping the six-day winning streak during the Asian session on Thursday. The fear of foreign exchange (FX) intervention from Japanese authorities lifts the Japanese Yen (JPY). Later on Thursday, the German Factory Orders for May and ECB Monetary Policy Meeting Accounts will be released. 

The growing speculation of FX intervention from the Japanese authorities provides some support to the JPY and caps the cross’s upside. Rabobank FX strategists said that the FX intervention could be imminent due to the weakness of the Japanese Yen, which is exerting downward pressure on consumer confidence.

Data released on Wednesday showed that the final reading of Japan’s Services PMI dropped to 49.4 in June from 49.8 in May. This figure registered the largest downward movement since January 2022 and was among the biggest on record. This, in turn, might undermine the JPY and create a tailwind for the cross. 

On the Euro front, the far right's hopes of winning outright in the French election fell on Tuesday, as centrist and left-wing candidates reluctantly banded together to stop Marine Le Pen's National Rally from seizing power for the first time, per Politico. However, the announcement of the French parliamentary elections on Sunday might add volatility to the EUR.