EUR/JPY is usually associated with bullish and bearish cycles, similar to the stock market, and for this reason 200SMA is of cardinal importance for the pair. Taking into account the yen's backward correlation with the stock market, closing the EUR/JPY below the 200 average would mean a decline in Asian shares and a significant JPY growth against major currencies. Kuroda's Governor, Bank of Japan, said it would do its best to weaken the yen through its quantitative easing program, but investors do not seem to care and continue to hedge their portfolios through the JPY. Given the strong momentum of JPY in the past few weeks and the stability in question in the eurozone, 200SMA is unlikely to keep the pair. We are waiting for the pair to confirm a breakthrough or rebound from the levels, and if successful, we expect MSCI Asia Pacific to test the bottom of $170.50.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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