EUR/JPY leaps to 158.00 as BoJ said to leave policy unchanged

• EUR/JPY rallies near 80 pips to test 158.00 in the European session.
• BoJ is reportedly said to leave policy settings unchanged next week.
• The US Dollar recovers ground, tracking the upsurge in the USD/JPY pair.

The EUR/JPY pair has seen a vertical rise over the last hour, as the Japanese Yen came under intense selling pressure following the latest headlines on the potential Bank of Japan (BoJ) policy outlook.

 Citing five sources familiar with the central bank's thinking, Reuters reported that the BoJ is unlikely to introduce any changes to its yield curve control (YCC) settings at its two-day monetary policy review meeting, concluding on July 28.  

The cross jumped from near the 157.15 region to test the 158.00 level, in a knee-jerk reaction to the dovish chatter, before reversing to trade at 157.77, where it now wavers. The pair is still up 1.21% on the day.

Earlier this week, the central bank Governor Kazuo Ueda poured cold water on any likely tweaks next week after he said that “there was  still some distance to sustainably achieve the 2% inflation target.” The Yen also met fresh supply following his comments, extending the rebound in the cross briefly above the 157 mark on Wednesday.

At the moment, the upsurge in the USD/JPY is offering some support to the US Dollar across the board, allowing the Greenback to resume its recovery, in turn, checking the rebound in the EUR/USD pair.

Amid a lack of fresh economic data from the US docket this Friday, the BoJ expectations will continue to drive the EUR/JPY cross, as investors resort to repositioning ahead of the critical BoJ and the Fed policy announcements next week.  

EUR/JPY Technical levels to watch