28 Oct 2013
EUR/JPY soars as appetite for risk returns, Nikkei sharp gains
FXstreet.com (Athens) – The EUR/JPY is trading higher on Monday as Nikkei gained 2.19%, as well as due to the general risk-on sentiment.
EUR/JPY looks upwards as Nikkei soars; risk appetite strikes back as Chinese fears abate
The EUR/JPY has been trading consistently upwards since the early start of the Asian trading session, while the last couple of hours is under pressure. The cross was well supported today since Nikkei gained roughly 2.20% and it is well known that there is a heavy inverse correlation between the Nikkei index and the Japanese currency. What’s more, the pair found solid support on the fact that traders believe that the U.S. Federal Reserve will keep its stimulus intact well into 2014. ‘Risk on’ mood which drives the cross higher and higher, might also be attributed to the fact that Chinese liquidity fears that gripped global markets during the last week, failed to be sustained over the weekend. Taken for granted that the Fed will show a continuation of QE3 at $85B/month on Wednesday, traders will feel happy ditching the safe haven assets in favor of higher yielding currencies, therefore the cross might climb even further upwards. Finally, market participants should bear in mind that any disappointing US data, could also boost further the risk sentiment, as it will be priced as a strong sign for continuation of QE3 at $85B/month by Fed.
Technical Aspects on EUR/JPY
Karen Jones Head Technical Analyst of Commerzbank, mentions that the “EUR/JPY EUR/JPY last week rallied to and held the initial test of the very long term retracement at 135.33 (23.6% retracement of the move down from the 1979 high). We note in addition the TD perfected set up on the daily chart. The May high at 133.83 has seen some erosion and we would allow for some slippage to key support, which remains the 55 day ma and 4 month uptrend at 132.28/131.94. Beyond this the market remains capable of gains to 136.71, the target from the triangle, which broke up from the end of last year, which we suspect will hold the topside. Beyond here, the June 2009 high at 139.26.
EUR/JPY looks upwards as Nikkei soars; risk appetite strikes back as Chinese fears abate
The EUR/JPY has been trading consistently upwards since the early start of the Asian trading session, while the last couple of hours is under pressure. The cross was well supported today since Nikkei gained roughly 2.20% and it is well known that there is a heavy inverse correlation between the Nikkei index and the Japanese currency. What’s more, the pair found solid support on the fact that traders believe that the U.S. Federal Reserve will keep its stimulus intact well into 2014. ‘Risk on’ mood which drives the cross higher and higher, might also be attributed to the fact that Chinese liquidity fears that gripped global markets during the last week, failed to be sustained over the weekend. Taken for granted that the Fed will show a continuation of QE3 at $85B/month on Wednesday, traders will feel happy ditching the safe haven assets in favor of higher yielding currencies, therefore the cross might climb even further upwards. Finally, market participants should bear in mind that any disappointing US data, could also boost further the risk sentiment, as it will be priced as a strong sign for continuation of QE3 at $85B/month by Fed.
Technical Aspects on EUR/JPY
Karen Jones Head Technical Analyst of Commerzbank, mentions that the “EUR/JPY EUR/JPY last week rallied to and held the initial test of the very long term retracement at 135.33 (23.6% retracement of the move down from the 1979 high). We note in addition the TD perfected set up on the daily chart. The May high at 133.83 has seen some erosion and we would allow for some slippage to key support, which remains the 55 day ma and 4 month uptrend at 132.28/131.94. Beyond this the market remains capable of gains to 136.71, the target from the triangle, which broke up from the end of last year, which we suspect will hold the topside. Beyond here, the June 2009 high at 139.26.