Snapshot: EUR/JPY is trading around 170.60, largely unchanged, as traders digest the prospect of further BoJ normalisation. The market’s focus is squarely on any signals reinforcing the case for another rate hike following the spring wage data. Risk sentiment is stable, with VIX at 17.82, providing little directional impetus.
- Watch 171.00; breach opens way to 171.50 resistance on short covering.
- Rising US real yields and firming dollar introduce downside risk if BoJ conviction weakens.
Bias into NY: Mildly bullish, driven by lingering expectations of further BoJ hikes, although dollar strength presents a headwind; look for a test of 171.00. A dovish surprise from the ECB’s June meeting could quickly reverse this setup.