EUR/JPY Signals & Technical Analysis
About the EUR/JPY (EURO & Japanese Yen)
The EUR/JPY pair is the abbreviated term used for the Euro and Japanese Yen this pair doesn't have a nickname. Before we get into the particulars, what exactly does the EUR/JPY rate mean? The exchange rate tells you how many Japanese Yens (the quote currency) are required to purchase one EUR (base currency). For example, if the pair is trading at125.06, it means it takes 125.06 Japanese Yens to buy 1 Euro.
Breaking Down ‘EUR/JPY’
The euro (€; EUR) is the official currency of 19 of the 28 member states of the European Union. The euro is the second largest and second most traded currency in the foreign exchange market after the United States dollar. The euro is divided into 100 cents.
Whereas, the Japanese Yen is classified as a safe haven currency. Before the financial crisis of 2008, several investors would take advantage of ultra-low interest rates from the Bank of Japan to borrow massively in Yen and invest the money abroad.
The Euro vs. the Japanese Yen. The Yen is a historically low-yielding currency, leading traders to borrow cheaply in JPY to purchase higher-yielding currencies, including EUR. Because of this, the pair is sensitive to the broad-based market view trend fluctuations. Volatility may be found in news related to the Eurozone debt crisis and from the Bank of Japan’s anti-deflation policy efforts introduced in 2013.
What Determines the EUR/JPY Exchange Rate?
Several factors can impact the EUR/JPY rate valuation, including
ECB & BOJ Monetary Policies The bank of the European Central Bank and Bank of Japan control the supply of money in the market, to keep the economy on track.
A dovish policy, which is also known as expansionary policy, from either of the central banks, weakens the related currency. In contrast, a hawkish monetary policy (contractionary policy) strengthens the currency.
Economic Events: The movement in the European and Japanese economic events determine the exchange rates. Top of the line economic events includes GDP Employment Change, Industrial Production, and Consumer Price Index. Better than forecast data increases the demand for related currency and impacts the value of either the Euro & Japanese yen, causing fluctuations in the EUR/JPY exchange rate.
Correlation is merely a mutual relationship or connection between two or more things.
Positive Correlation - The positive relationship merely is when pairs move in tandem with each other.
In the forex world SGD/JPY, CAD/JPY, and SEK/JPY currency pairs are positively correlated. It's because all these pairs have a Japanese yen in the numerator. So, any change in the EUR will be reflected in these pairs.
Negative Correlation – In contrast, a negative relationship is when forex pairs move in the opposite direction. For example, USD/PLN, USD/CNH, USD/CAD
The euro is one of the most important alternatives to the U.S. dollar among fiat currencies (the EUR/USD currency exchange rate is one if the most often traded pairs in the world). This is why there is often a positive link between the euro and gold: both assets are negatively correlated with the greenback.
However, the relationship is far from being a perfect correlation, This is because gold is not merely an alternative against the U.S. dollar, but also against the current monetary system based on fiat currencies. Therefore, in some cases the euro and the dollar both lose (or gain) ground against gold.
What Determines the EUR/JPY Exchange Rate?
Several factors can impact the EUR/JPY rate valuation, including:
ECB & BOJ Monetary Policies: The European Central Bank and the Bank of Japan control the supply of money in the market, to keep the economy on track. A dovish policy, which is also known as expansionary policy, from either of the central banks, weakens the related currency. In contrast, a hawkish monetary policy (contractionary policy) strengthens the currency.
Economic Events: The movement in the Euro and Japanese economic events determine the exchange rates.
Top of the line economic events includes GDP, Employment Change, Industrial Production, and Consumer Price Index. Better than forecast data increases the demand for related currency and impacts the value of either the Euro or the Japanese Yen, causing fluctuations in the EUR/JPY exchange rate.
Major Economic Events:
Gross Domestic Product – the Gross domestic product is the central measure of economic growth in the region.
Employment Change – Both of the currencies are sensitive to changes in employment, as slacks in the labor market cause a drop in Inflation rates.
Consumer Price Index – Since one of the goals of the ECB and BOJ is to maintain price stability, they keep an eye on inflation indicators such as the CPI. If the annual CPI deviates from the central bank’s target, the ECB or the BOJ could make use of their monetary policy tools to keep inflation in check.
The balance of Trade – Europe has an extremely robust trade sector, so currency traders and bank officials alike tend to watch changes in the country’s export and import levels.
Political announcements &; natural disasters – Besides the scheduled economic events, political elections, new systems, wars, terror incidents, natural calamities, etc. can all cause severe variations within the EUR/JPY.
Assets and Currencies Influencing Price Action of EUR/USD
- GJGB10 - The Japan Generic Government 10Y Yield
- T-Note 10y and T-Bond 30y
EUR/JPY Price Factors - People, Economic Data, Organizations and People
- Bank of Japan - The official central bank of Japan tasked with issuing financial statements and determining interest rates. The bank has got attention worldwide for its low interest rates. For example in 2016, BOJ introduced a negative interest to offset rising consumer prices. Watch out for key announcements in interest rates changes, and the Bank’s involvement with the bond market.
- The Bank of England - Prides itself as an institute of monetary stability, the Bank of England has received admiration as the most reliable central banks globally. The U.K Central Bank acts as a last resort lender and as the government’s bank.Key decisions such as the strategic stimulus package and Quantitative Easing have an impact on the direction of the Euro.
- Japan Statistics Bureau - Traders need to track major statistic releases from the Japan Statistics Bureau. Focus on the following, GDP Figures, Trade Balance Numbers and the Consumer Price Index.
- Japan Meteorological Agency - Japan has faced various natural disasters throughout history. Paying attention to any news from the Japan Meteorological Agency will prepare you for any prudent chances in price patterns due to warnings of Earthquakes.
Standard lot Size: 100,00
Mini lot size: 10,000
Price minimum increment: 0.001
Pip Value: $9.00
EUR/JPY - FAQs
The value of EUR/JPY is influenced by a variety of factors, including economic and political conditions in the Eurozone and Japan, interest rate differentials between the two currencies, and the overall demand for the Euro and the Yen in the global foreign exchange market.
Traders may use technical analysis, fundamental analysis, or a combination of both approaches to make trading decisions with regard to EUR/JPY. It is also common for a trader to use risk management techniques, such as stop-loss orders, to help manage their exposure to the pair.
The Euro is the official currency of the European Union and is used by 19 of the 27 EU member states, while the Japanese Yen is the official currency of Japan and is widely used throughout Asia.
In addition to the popularity of the constituent currencies, there are a few other factors that may make EUR/JPY an attractive pair for traders:
Liquidity: EUR/JPY is a highly liquid currency pair, which means that it is easy to buy and sell in the market and that there is usually a large amount of trading activity around it. This can make it an attractive pair for traders who want to enter and exit positions quickly.
Volatility: EUR/JPY can be a fairly volatile pair, with large price movements occurring relatively frequently. This can make it an exciting pair to trade, but it also means that there is a higher level of risk involved.
Correlation: It's important to consider the relationship between EUR/JPY and other currency pairs. If you are already trading other pairs, it's important to consider how EUR/JPY might be correlated with those pairs and how that might impact your overall trading strategy.
EUR/JPY’s setup is currently trading against a bullish sentiment. A variety of factors are influencing the direction of the trading pair, including economic data, political decisions and investor sentiment. However, the setup might support buyers for a while until a major market event takes place. One could not definitively say whether to trade the pair in either direction at any given moment since the market is subject to changes at all times. It is up to the individual trader to monitor current price movements and analyse the market conditions before making a trading decision about EUR/JPY.
At the time of writing, EUR is getting stronger against JPY. According to current exchange rate information, 1 Euro is equivalent to 140.68 Japanese Yen. This is an improvement over the past few days where 1 Euro was equal to 133.44 Yen and indicates that EUR is appreciating in value compared to JPY.
The EUR/JPY currency pair represents the exchange rate of the euro against the Japanese yen. The price of this currency pair is affected by a variety of economic and political factors which cause fluctuations in its value. These include:
1. Interest Rates: When one country’s Central Bank raises or lowers interest rates, it can significantly impact the demand for that particular country’s currency, thus affecting exchange rates between two countries with different interest rate policies.
2. Economic Performance: Factors such as GDP growth, unemployment rates and inflation levels can have an impact on a currency's relative value to over time as nations may begin to see their currencies appreciate or depreciate due to these economic conditions.
3. Political Tensions: Unstable political environments can lead to uncertainty in financial markets which may then spill over into foreign exchange markets, resulting in changes in exchange rates between countries whose governments are locked into tension with each other.
4. International Trade Levels: As trade partnerships change and evolve between nations, so too will they affect their respective currency values; imports become more expensive when their domestic currency appreciates while exports become cheaper if it weakens respectively.