• EUR/JPY reverses modest intraday dip and climbs back closer to a nearly 15-year peak.
• Hawkish remarks by ECB officials underpin the shared currency and lend some support.
• Intervention fears hold back bulls from placing aggressive bets and cap gains the upside.

The EUR/JPY cross attracts some dip-buying near the 157.45-157.40 area on Wednesday and has now recovered a major part of its modest intraday losses. Spot prices currently steadily climb back closer to 158.00 round-figure mark and currently trade near the highest level since September 2008 touched on Tuesday.

The shared currency draws support from hawkish remarks by European Central Bank (ECB) officials, which, in turn, acts as a tailwind for the EUR/JPY cross. In fact, ECB Vice President, Luis de Guindos said that the July rate hike is set and added there is more ground to be covered on rates, though the September move will depend on data. Furthermore, ECB policymaker Madis Muller noted that risks to inflation still are on the upside and that it is too early to say where rates will end up.

This follows the overnight comments by ECB President Christine Lagarde that inflation in the Eurozone had entered a new phase that could linger for some time. Lagarde further noted that it is unlikely that in the near future the ECB will be able to state with full confidence that the peak rates have been reached. In contrast, the Bank of Japan (BoJ) Governor Kazuo Ueda recently ruled out the possibility of any change in the ultra-loose policy settings or alter the yield curve control measures.

The BoJ's dovish stance, along with the prevalent risk-on mood, undermine the Japanese Yen (JPY) and lend lending support to the EUR/JPY cross. However, speculations that Japanese authorities may intervene again to support the domestic currency help limit losses for the JPY. In fact, Japanese Finance Minister Shunichi Suzuki said on Tuesday that they will watch the forex market with a sense of urgency and would respond appropriately if currency moves became excessive. The warning was reiterated by Japan's top currency diplomat Masato Kanda earlier this Wednesday, which seems to cap gains for the cross.

Market participants also seem to have moved to the sidelines ahead of ECB President Christine Lagarde and BoJ Governor Kazuo Ueda's appearance at the ECB Forum on Central Banking, in Sintra. In the meantime, worries about economic headwinds stemming from rapidly rising borrowing costs hold back traders from placing aggressive bullish bets around the shared currency and contribute to keeping a lid on the EUR/JPY cross. Nevertheless, the fundamental backdrop favours bullish traders and suggests that the path of least resistance for spot prices remain to the upside