• EUR/JPY attracts buyers for the third straight day and climbs to a multi-week top.
• A combination of factors undermines the JPY and lends some support to the cross. 
• The divergent ECB-BoJ policy expectations warrant some caution for bullish traders. 

The EUR/JPY cross gains positive traction for the third successive day and climbs to a three-and-half-week top during the first half of the European session on Thursday. Spot prices currently trade around the 161.55-161.60 region, up over 0.25% for the day, with bulls looking to build on the momentum beyond the 50-day Simple Moving Average (SMA) and 

The Japanese Yen (JPY) is undermined by the political uncertainty in Japan, where the ruling Liberal Democratic Party (LDP) will elect its new president on Friday to replace outgoing Prime Minister Fumio Kishida. Apart from this, a generally positive tone around the equity markets is seen denting the JPY's relative safe-haven status and lending some support to the EUR/JPY cross. 

The upside for the EUR/JPY cross, however, remains capped amid a modest pullback slide in the shared currency. This week's dismal Eurozone macro data bolstered the case for at least a 25 basis points (bps) interest rate cut by the European Central Bank (ECB) at its October meeting. This marks a big divergence in comparison to hawkish Bank of Japan (BoJ) expectations and caps the pair. 

Investors seem convinced that the BoJ will hike interest rates again by the end of this year. The bets were reaffirmed by the BoJ meeting minutes released earlier today, showing that board members shared a view over the need for vigilance to the risk of inflation overshoot and that it was appropriate to adjust the degree of monetary support moderately. This warrants caution for the EUR/JPY bulls.