EUR/JPY dives to levels near 172.00 after BoJ's hawkish comments

• The Euro extends losses against the Yen, as BoJ officials hint at an October rate hike.
• The pair has retreated nearly 1% from Monday's highs, at 143.90.
• France's political uncertainty is posing additional weight on the Euro.

The Euro reversal from 173.90 highs against the Yen is extending 0.73% lower so far on Tuesday, reaching one-week lows at 172.20 so far, as the JPY appreciates across the board following hawkish comments by BoJ officials. 

A news report from Bloomberg released earlier on Tuesday, citing BoJ officials, showed lower concerns about the impact of tariffs, following the trade deal with the US, and hinted at the next rate hike as soon as October. 

This report has eased concerns about the political crisis in Japan, triggered by the resignation of Prime Minister Shigeru Ishiba. Among the candidates to replace him is the former Minister for Economic Security, Sanae Takaichi, who has shown her opposition to higher interest rates, which might put the BoJ's monetary policy into question.

In Europe, the resignation of French PM François Bayrou after the expected defeat on a confidence vote has led the Eurozone's second-largest economy into political turmoil. President Macron's aim to nominate a replacement in the coming days, however, has averted a strong negative impact on the Euro, at least for now.

The focus this week will be on the European Central Bank's monetary policy decision. The bank is widely expected to leave its benchmark rate at the current 2% level, but President Lagarde's comments will be analysed with interest to see whether there is room for further monetary easing.