EUR/JPY dives to 168.50 on election risk, focus shifts to BoJ policy

The EUR/JPY pair dropped to 168.50 due to political uncertainty in the Eurozone. French President Macron called for a snap election after Far-right party led by Bardella gained significant seats. The Bank of Japan may reduce asset purchases for policy-normalization. The Euro weakened as Macron’s decision raised concerns about fiscal policies. Lack of support for interest-rate cuts by ECB policymakers added to Euro’s woes. ECB worries about firm wage growth affecting inflation. A weak Euro could boost inflation through competitive exports. BoJ expected to maintain interest rates but reduce asset purchases. Japan’s Q1 GDP contraction revised to 1.8% from 2.0% on an annualized basis.