EUR/JPY recovers above 140.00 following sharp decline

• EUR/JPY dropped to a fresh multi-week low at 139.25 on Thursday.
• Japanese government finally intervened in the FX market.
• The pair trades deep in negative territory despite latest rebound.

EUR/JPY lost nearly 300 pips during the European trading hours and touched its lowest level in two weeks at 139.25 before staging a rebound. As of writing, the pair was trading at 140.58, where it was still down nearly 1% on a daily basis.

During the Asian trading hours, the Bank of Japan (BoJ) announced that it left the policy rate unchanged at -0.1% as expected and maintained the 10-year Japanese Government bond yield target at 0%. The BoJ's inaction caused the Japanese yen to come under selling pressure and EUR/JPY climbed to a daily high of 143.70.

In a dramatic turn of events, Japan's top currency diplomat Masato Kanda confirmed over that they have intervened in the FX market and JPY recorded impressive gains against its major rivals. With the initial reaction, USD/JPY lost 500 pips, CHF/JPY fell over 3% and GBP/JPY fell from 164.50 to a seven-week low of 159.65.

Japanese Finance Minister Shunichi Suzuki and Kanda are expected to brief reporters on the decision to intervene in the FX market at 0930 GMT.

Later in the day, the European Commission will release the preliminary Consumer Confidence data for September.

Technical levels to watch for