• EUR/JPY trades around 176.40, down 0.35% on the day, after hitting a record high of 177.94 on Thursday.
• The Euro weakens as French President Macron fails to convince the opposition ahead of the appointment of a new Prime Minister in the coming hours.
• Japan’s incoming Prime Minister Sanae Takaichi is expected to pursue fiscal expansion while maintaining a loose monetary stance.

The Euro (EUR) extends its pullback against the Japanese Yen (JPY) on Friday, with EUR/JPY losing 0.35% to 176.40 at the time of writing, after reaching an all-time high of 177.94 in the previous session. The European currency remains under pressure amid political instability in France, where the resignation of Prime Minister Sébastien Lecornu has reignited concerns about the government’s ability to contain its fiscal deficit.

French President Emmanuel Macron, under pressure to appoint a new head of government before the end of the day, struggles to secure a consensus after a series of unproductive meetings with opposition parties. The lack of tangible progress reinforces the sense of political uncertainty in the Eurozone’s second-largest economy, as the pension reform could once again be delayed.

Meanwhile, the victory of Sanae Takaichi in the ruling Liberal Democratic Party (LDP) leadership race in Japan has sparked speculation about a major fiscal stimulus and the continuation of an accommodative monetary policy.

The incoming Japanese Prime Minister, a staunch supporter of 'Abenomics,' stated that the Bank of Japan (BoJ) would set policy independently while coordinating with the government, aiming to prevent excessive Japanese Yen depreciation. 

However, political tensions within Japan’s ruling coalition persist. Komeito party leader Tetsuo Saito threatened on Friday to leave the alliance, citing deep disagreements over political funding issues. Meanwhile, Japanese Finance Minister Katsunobu Kato reaffirmed that authorities would closely monitor any excessive volatility in the JPY, hinting at the possibility of intervention in the foreign exchange market.

In this context, EUR/JPY remains under pressure, caught between the Eurozone's political fragility and expectations of stronger fiscal support in Japan.