EUR/JPY finds cushion near 165.00 while safe-haven demand of Yen remains firm

• EUR/JPY gains temporary ground near 165.00 after a sharp sell-off earlier in the day.
• Tensions between Iran and Israel have increased the safe-haven demand of the Japanese Yen.
• Investors will pay close attention to the BoJ's monetary policy announcement on Tuesday.

The EUR/JPY pair finds temporary support near 165.00 during late Asian hours on Friday after a sharp sell-off earlier in the day. The pair slumped as tensions in the Middle East region increased demand for safe-haven assets such as Japanese yen (JPY).

Early Friday, Israel launched a series of attacks on military bases and nuclear facilities in the northeast of Iran's capital, Tehran, aiming to restrict Iran's economy from building nuclear warheads. Israeli Prime Minister Benjamin Netanyahu has stated that the war will would take "many days" and their military is preparing for any retaliation from Iran.

Meanwhile, United States (US) President Donald Trump has stated during Asian hours that Iran "cannot have a nuclear bomb", while reiterating his hopes for a peaceful end to the tensions. 

On the domestic front, investors await the Bank of Japan's (BoJ) monetary policy announcement on Tuesday. The BoJ is expected to keep interest rates steady at 0.5% as officials have stated that the US tariff policy has prompted growth concerns in the near term. However, they are confident that the underlying inflation is on track to return to the 2% target.

Meanwhile, the Euro (EUR) exhibits a mixed performance on Friday as European Central Bank (ECB) Vice President Luis de Guindos has expressed concerns over economic growth amid trade war risk. "The economy had proven resilient but faced a number of risks, such as tariffs, that could curb growth," Guindos said on Thursday.

On the monetary policy front, ECB officials have signaled a pause in the monetary easing cycle. ECB board member Isabel Schnabel said on Thursday that the monetary easing cycle is "coming to an end" as "medium-term inflation is stabilizing around target", Bloomberg reported.