EUR/JPY rebounds swiftly from two-week low, moves back above 173.00 mark

• EUR/JPY attracts some dip-buyers on Friday and recovers over 150 pips from a two-week low.
• The uptick is exclusively sponsored by the emergence of fresh selling around the Japanese Yen.
• Intervention fears and political uncertainty in France might keep a lid on any meaningful gains.

The EUR/JPY cross stages a goodish bounce from a two-week low touched during the Asian session this Friday and climbs back above the 173.00 round-figure mark in the last hour. Spot prices, for now, seem to have stalled a sharp retracement slide from the 175.40-175.45 area, or the highest level since 1992 set on Thursday amid the emergence of fresh selling around the Japanese Yen (JPY).

The overnight market reaction to speculation that Japanese authorities might have stepped into the FX market to lift the domestic currency fades rather quickly in the absence of any concrete evidence of intervention. This, along with the underlying strong bullish sentiment surrounding the equity markets, undermines the safe-haven JPY and is seen as a key factor that assists the EUR/JPY cross to attract fresh buyers on the last day of the week. 

That said, the uncertainty surrounding the formation and composition of France's new government might hold back traders from placing aggressive bullish bets around the shared currency. Apart from this, bets that the Bank of Japan (BoJ) may raise interest rates and that Japanese authorities will eventually intervene to support the JPY should keep a lid on any meaningful appreciating move for the EUR/JPY cross, warranting some caution for bearish traders.

In fact, Japan's Chief Cabinet Secretary Yoshimasa Hayashi said on Friday that it is important for currencies to move in a stable manner reflecting fundamentals and that he is ready to take all possible means on forex. Furthermore, Japanese Finance Minister Shunichi Suzuki reiterated that rapid FX moves are undesirable. Hence, it will be prudent to wait for strong follow-through buying before positioning for the resumption of the recent well-established uptrend.