• EUR/JPY rallies over 50 pips from the daily low amid some repositioning ahead of the ECB.
• The BoJ’s dovish outlook continues to undermine the JPY and acts as a tailwind for the cross.
• Intervention fears could limit the JPY losses and cap gains ahead of the central bank event risk.

The EUR/JPY cross attracts some dip-buying near the 164.15-164.10 area on Thursday and climbs to a fresh daily peak during the first half of the European session. Spot prices currently trade around the 164.65-164.70 region and for now, seem to have snapped a two-day losing streak to the weekly low touched on Wednesday.

The Japanese Yen (JPY) continues to be undermined by the Bank of Japan's (BoJ) cautious approach and uncertain outlook for future rate hikes. Apart from this, some repositioning trade ahead of the key central bank event risk – the highly-anticipated European Central Bank (ECB) meeting – acts as a tailwind for the EUR/JPY cross. That said, a combination of factors might hold back bulls from placing aggressive bets and cap the upside.

A flurry of verbal warnings from Japanese officials that they would intervene in the markets to address any excessive falls in the domestic currency, along with the cautious market mood, could help limit losses for the safe-haven JPY. Apart from this, bets that the ECB will start cutting interest rates in June, amid a faster-than-anticipated fall in the Eurozone inflation, should contribute to keeping a lid on the EUR/JPY cross.

Hence, the market focus will remain glued to fresh economic projections, which, along with ECB President Christine Lagarde's comments at the post-meeting press conference, will be looked upon for cues about the timing of the first rate cut. This, in turn, will influence the shared currency in the near term and provide a fresh directional impetus to the EUR/JPY cross. Nevertheless, the fundamental backdrop warrants caution for bullish traders