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EUR JPY - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE In recent weeks, the persistently high inflation has seen the ECB take a more hawkish turn with the bank confirming at least a 25bsp hike for July and possibility of a 50bsp hike in September. Despite the hawkish policy shift, the concerns over fragmentation in bond spreads (BTP\Bund) as well as fears of growing stagflation risks has seen the EUR struggle to hold onto any hawkish ECB momentum. The ECB did try to comfort spread concerns with promises of a new fragmentation tool, and even though it has kept spreads from widening further, concerns remain. If the bank can convince markets that their new spread tool(s) can stop fragmentation it should be supportive for the EUR. However, with a material energy crisis facing the EZ due to the war in Ukraine, the economic prospects look bleak. Even though growth data was surprisingly resilient in Q2, fresh recession fears ramped up as recent forward-looking growth data surprised materially lower for key members like Germany and France. Based on the forward-looking signals from leading indicators we think recession is likely in the EZ and that the narrative has turned more bearish for the EUR until that improves. POSSIBLE BULLISH SURPRISES Geopolitics remains a focus, and any possible de-escalation or cease fire in Ukraine would open up a lot of EUR upside. Also keep Italian politics in mind where any successful attempt by PM Draghi to stay in power should ease spread concerns. Stagflation fears are high, with growth expected to slow while inflation stays high. Recent PMI data has invigorated recession fears, which means any materially better-than-expected growth data (Flash PMIs this week) could spark upside. Even though the ECB’s recent communication has been enough to push BTP/ Bund spreads from their recent highs the concerns remain, especially with Italian politics further exacerbating the problem. Thus, any insights or clarity regarding their new tool that convinces markets it can solve fragmentation should be supportive for the EUR. Energy concerns are still in focus, which means watching the Nord Stream 1 pipeline closely, if Russia resumes gas flows after maintenance ends this week it could see EUR upside. POSSIBLE BEARISH SURPRISES Geopolitics remain in focus, any escalation in the Ukraine war that risks including NATO would be big negative risks. Also keep Italian politics in mind, where any triggers of general elections risk further spread concerns & pressure the EUR. Spread fragmentation remains in focus, and if the ECB fail to calm fears or even walks back on recent hawkish comments it could trigger bearish reactions in the EUR. Growth concerns continue weighing on the EUR and means incoming growth data (Flash PMIs this week) will be in focus, where any major negative surprises could trigger downside. We've seen a chunky repricing in hike expectations over the past three weeks, and any further lower repricing is expected to weigh on the EUR. Energy concerns are still in focus, which means watching the Nord Stream 1 pipeline closely, if Russia keeps gas flows closed after maintenance ends this week it could see EUR downside. BIGGER PICTURE The fundamental outlook for the EUR has shifted to bearish with recent leading indicators pointing to a much faster economic slowdown than markets had previously expected. There are bearish and bullish factors in play right now though. On the bearish side we have geopolitics, stagflation, spread fragmentation and energy concerns acting as negative drivers. But we also have hawkish ECB policy as a possible supportive driver. Recession risks does open up a narrative change for the EUR which will require markets to change their forecasts to reflect higher recession risks which should continue to weigh on the EUR. JPY FUNDAMENTAL OUTLOOK: BEARISH BASELINE The Yen has seen a lot of depreciation this year driven by very negative fundamentals. Yield differentials has by far had the biggest negative impact. With other major central banks starting aggressive hiking cycles, it has lifted yields quite dramatically, which has seen yields like US10Y push considerably higher than 10-year Japanese yields capped at 0.25% by yield curve control. That means dovish monetary policy remains a key negative driver. Despite inflation starting to push higher in Japan, and despite the lessons from other central banks now struggling with inflation last seen since the 70’s, the bank has once again at their June meeting stayed stubbornly dovish keeping yields capped at 0.25%. At this stage the bank is playing a very dangerous game by allowing the JPY to weaken, further adding to inflationary risks. Their dovish persistence remains a negative for the JPY. Even though the JPY is considered a safe haven, inflows has been limited compared to other cycles. The reason is Japan’s current account surplus (a main reason for safe haven appeal) has deteriorated due to the rise in commodity prices. Japan imports over 90% of their energy commodities , so continued rise in oil prices has added to downside and eroded some safe haven appeal. The BoJ and MoF’s reluctance to intervene to stop the rapid depreciation in the JPY in recent weeks has been noticeable. As long as they just voice their dislike but fail to act, the market will keep testing them and shorting the JPY. POSSIBLE BULLISH SURPRISES Catalyst that triggers speculation that the BoJ could drop YCC or hike rates or both (big upside surprises in inflation ) could trigger upside in JPY, which means inflation data will be important to keep on the radar. Catalysts that trigger meaningful corrections in US10Y (less hawkish Fed, faster deceleration in US inflation , faster deceleration in US growth) or meaningful bouts of risk off sentiment could trigger bullish reactions from the JPY. Any catalyst that triggers meaningful downside in key commodities like Oil (deteriorating demand outlook, ease in supply shortage) could trigger bullish JPY reactions. Any intervention from the BoJ or MoF to stop JPY depreciation (buying the JPY or giving firm and clear lines in the sand for USDJPY ) could offer decent reprieve for the JPY. POSSIBLE BEARISH SURPRISES With yield differentials playing such a huge role for the JPY, any catalysts that push US10Y higher (more aggressive Fed, further acceleration in US inflation , better-than-expected US growth data) could trigger further bearish price action for the JPY. Any catalyst that creates further upside in oil prices (further supply concerns, geopolitical tensions) poses downside risks for Japan’s current account surplus and could trigger further bearish reactions in the JPY. Further reluctance from the BoJ and MoF to address the concerning depreciation in the JPY, and further reluctance from the BoJ to pivot away from very dovish policy is a continued negative driver for the JPY to keep on the radar. If the BoJ pushes back against calls for a policy shift despite upside surprise in CPI could trigger further JPY downside. BIGGER PICTURE The bigger picture remains bleak for the JPY, especially after the BoJ once again stuck to the same overly dovish script at their June meeting. As long as US10Y gains ground and as long as the BoJ stays stubbornly dovish and no push back is made against the JPY weakness from the BoJ or MoF, the bias remains lower. Take note that positioning has been stretched (tactically and CFTC) for some time, which means we don’t want to chase the JPY lower and bullish reactions can see outsized upside. It also means watching incoming CPI data closely as any huge upside surprises could trigger speculation of a possible policy shift.
by thunderpips
EUR JPY - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE In recent weeks, the persistently high inflation has seen the ECB take a more hawkish turn with the bank confirming at least a 25bsp hike for July and possibility of a 50bsp hike in September. Despite the hawkish policy shift, the concerns over fragmentation in bond spreads (BTP\Bund) as well as fears of growing stagflation risks has seen the EUR struggle to hold onto any hawkish ECB momentum. The ECB did try to comfort spread concerns with promises of a new fragmentation tool, and even though it has kept spreads from widening further, concerns remain. If the bank can convince markets that their new spread tool(s) can stop fragmentation it should be supportive for the EUR. However, with a material energy crisis facing the EZ due to the war in Ukraine, the economic prospects look bleak. Even though growth data was surprisingly resilient in Q2, fresh recession fears ramped up as recent forward-looking growth data surprised materially lower for key members like Germany and France. Based on the forward-looking signals from leading indicators we think recession is likely in the EZ and that the narrative has turned more bearish for the EUR until that improves. POSSIBLE BULLISH SURPRISES Geopolitics remains a focus, and any possible de-escalation or cease fire in Ukraine would open up a lot of EUR upside. Also keep Italian politics in mind where any successful attempt by PM Draghi to stay in power should ease spread concerns. Stagflation fears are high, with growth expected to slow while inflation stays high. Recent PMI data has invigorated recession fears, which means any materially better-than-expected growth data (Flash PMIs this week) could spark upside. Even though the ECB’s recent communication has been enough to push BTP/ Bund spreads from their recent highs the concerns remain, especially with Italian politics further exacerbating the problem. Thus, any insights or clarity regarding their new tool that convinces markets it can solve fragmentation should be supportive for the EUR. Energy concerns are still in focus, which means watching the Nord Stream 1 pipeline closely, if Russia resumes gas flows after maintenance ends this week it could see EUR upside. POSSIBLE BEARISH SURPRISES Geopolitics remain in focus, any escalation in the Ukraine war that risks including NATO would be big negative risks. Also keep Italian politics in mind, where any triggers of general elections risk further spread concerns & pressure the EUR. Spread fragmentation remains in focus, and if the ECB fail to calm fears or even walks back on recent hawkish comments it could trigger bearish reactions in the EUR. Growth concerns continue weighing on the EUR and means incoming growth data (Flash PMIs this week) will be in focus, where any major negative surprises could trigger downside. We've seen a chunky repricing in hike expectations over the past three weeks, and any further lower repricing is expected to weigh on the EUR. Energy concerns are still in focus, which means watching the Nord Stream 1 pipeline closely, if Russia keeps gas flows closed after maintenance ends this week it could see EUR downside. BIGGER PICTURE The fundamental outlook for the EUR has shifted to bearish with recent leading indicators pointing to a much faster economic slowdown than markets had previously expected. There are bearish and bullish factors in play right now though. On the bearish side we have geopolitics, stagflation, spread fragmentation and energy concerns acting as negative drivers. But we also have hawkish ECB policy as a possible supportive driver. Recession risks does open up a narrative change for the EUR which will require markets to change their forecasts to reflect higher recession risks which should continue to weigh on the EUR. JPY FUNDAMENTAL OUTLOOK: BEARISH BASELINE The Yen has seen a lot of depreciation this year driven by very negative fundamentals. Yield differentials has by far had the biggest negative impact. With other major central banks starting aggressive hiking cycles, it has lifted yields quite dramatically, which has seen yields like US10Y push considerably higher than 10-year Japanese yields capped at 0.25% by yield curve control. That means dovish monetary policy remains a key negative driver. Despite inflation starting to push higher in Japan, and despite the lessons from other central banks now struggling with inflation last seen since the 70’s, the bank has once again at their June meeting stayed stubbornly dovish keeping yields capped at 0.25%. At this stage the bank is playing a very dangerous game by allowing the JPY to weaken, further adding to inflationary risks. Their dovish persistence remains a negative for the JPY. Even though the JPY is considered a safe haven, inflows has been limited compared to other cycles. The reason is Japan’s current account surplus (a main reason for safe haven appeal) has deteriorated due to the rise in commodity prices. Japan imports over 90% of their energy commodities , so continued rise in oil prices has added to downside and eroded some safe haven appeal. The BoJ and MoF’s reluctance to intervene to stop the rapid depreciation in the JPY in recent weeks has been noticeable. As long as they just voice their dislike but fail to act, the market will keep testing them and shorting the JPY. POSSIBLE BULLISH SURPRISES Catalyst that triggers speculation that the BoJ could drop YCC or hike rates or both (big upside surprises in inflation ) could trigger upside in JPY, which means inflation data will be important to keep on the radar. Catalysts that trigger meaningful corrections in US10Y (less hawkish Fed, faster deceleration in US inflation , faster deceleration in US growth) or meaningful bouts of risk off sentiment could trigger bullish reactions from the JPY. Any catalyst that triggers meaningful downside in key commodities like Oil (deteriorating demand outlook, ease in supply shortage) could trigger bullish JPY reactions. Any intervention from the BoJ or MoF to stop JPY depreciation (buying the JPY or giving firm and clear lines in the sand for USDJPY ) could offer decent reprieve for the JPY. POSSIBLE BEARISH SURPRISES With yield differentials playing such a huge role for the JPY, any catalysts that push US10Y higher (more aggressive Fed, further acceleration in US inflation , better-than-expected US growth data) could trigger further bearish price action for the JPY. Any catalyst that creates further upside in oil prices (further supply concerns, geopolitical tensions) poses downside risks for Japan’s current account surplus and could trigger further bearish reactions in the JPY. Further reluctance from the BoJ and MoF to address the concerning depreciation in the JPY, and further reluctance from the BoJ to pivot away from very dovish policy is a continued negative driver for the JPY to keep on the radar. If the BoJ pushes back against calls for a policy shift despite upside surprise in CPI could trigger further JPY downside. BIGGER PICTURE The bigger picture remains bleak for the JPY, especially after the BoJ once again stuck to the same overly dovish script at their June meeting. As long as US10Y gains ground and as long as the BoJ stays stubbornly dovish and no push back is made against the JPY weakness from the BoJ or MoF, the bias remains lower. Take note that positioning has been stretched (tactically and CFTC) for some time, which means we don’t want to chase the JPY lower and bullish reactions can see outsized upside. It also means watching incoming CPI data closely as any huge upside surprises could trigger speculation of a possible policy shift.
by thunderpips
EUR JPY - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE In recent weeks, the persistently high inflation has seen the ECB take a more hawkish turn with the bank confirming at least a 25bsp hike for July and possibility of a 50bsp hike in September. Despite the hawkish policy shift, the concerns over fragmentation in bond spreads (BTP\Bund) as well as fears of growing stagflation risks has seen the EUR struggle to hold onto any hawkish ECB momentum. The ECB did try to comfort spread concerns with promises of a new fragmentation tool, and even though it has kept spreads from widening further, concerns remain. If the bank can convince markets that their new spread tool(s) can stop fragmentation it should be supportive for the EUR. However, with a material energy crisis facing the EZ due to the war in Ukraine, the economic prospects look bleak. Even though growth data was surprisingly resilient in Q2, fresh recession fears ramped up as recent forward-looking growth data surprised materially lower for key members like Germany and France. Based on the forward-looking signals from leading indicators we think recession is likely in the EZ and that the narrative has turned more bearish for the EUR until that improves. POSSIBLE BULLISH SURPRISES Geopolitics remains a focus, and any possible de-escalation or cease fire in Ukraine would open up a lot of EUR upside. Also keep Italian politics in mind where any successful attempt by PM Draghi to stay in power should ease spread concerns. Stagflation fears are high, with growth expected to slow while inflation stays high. Recent PMI data has invigorated recession fears, which means any materially better-than-expected growth data (Flash PMIs this week) could spark upside. Even though the ECB’s recent communication has been enough to push BTP/ Bund spreads from their recent highs the concerns remain, especially with Italian politics further exacerbating the problem. Thus, any insights or clarity regarding their new tool that convinces markets it can solve fragmentation should be supportive for the EUR. Energy concerns are still in focus, which means watching the Nord Stream 1 pipeline closely, if Russia resumes gas flows after maintenance ends this week it could see EUR upside. POSSIBLE BEARISH SURPRISES Geopolitics remain in focus, any escalation in the Ukraine war that risks including NATO would be big negative risks. Also keep Italian politics in mind, where any triggers of general elections risk further spread concerns & pressure the EUR. Spread fragmentation remains in focus, and if the ECB fail to calm fears or even walks back on recent hawkish comments it could trigger bearish reactions in the EUR. Growth concerns continue weighing on the EUR and means incoming growth data (Flash PMIs this week) will be in focus, where any major negative surprises could trigger downside. We've seen a chunky repricing in hike expectations over the past three weeks, and any further lower repricing is expected to weigh on the EUR. Energy concerns are still in focus, which means watching the Nord Stream 1 pipeline closely, if Russia keeps gas flows closed after maintenance ends this week it could see EUR downside. BIGGER PICTURE The fundamental outlook for the EUR has shifted to bearish with recent leading indicators pointing to a much faster economic slowdown than markets had previously expected. There are bearish and bullish factors in play right now though. On the bearish side we have geopolitics, stagflation, spread fragmentation and energy concerns acting as negative drivers. But we also have hawkish ECB policy as a possible supportive driver. Recession risks does open up a narrative change for the EUR which will require markets to change their forecasts to reflect higher recession risks which should continue to weigh on the EUR. JPY FUNDAMENTAL OUTLOOK: BEARISH BASELINE The Yen has seen a lot of depreciation this year driven by very negative fundamentals. Yield differentials has by far had the biggest negative impact. With other major central banks starting aggressive hiking cycles, it has lifted yields quite dramatically, which has seen yields like US10Y push considerably higher than 10-year Japanese yields capped at 0.25% by yield curve control. That means dovish monetary policy remains a key negative driver. Despite inflation starting to push higher in Japan, and despite the lessons from other central banks now struggling with inflation last seen since the 70’s, the bank has once again at their June meeting stayed stubbornly dovish keeping yields capped at 0.25%. At this stage the bank is playing a very dangerous game by allowing the JPY to weaken, further adding to inflationary risks. Their dovish persistence remains a negative for the JPY. Even though the JPY is considered a safe haven, inflows has been limited compared to other cycles. The reason is Japan’s current account surplus (a main reason for safe haven appeal) has deteriorated due to the rise in commodity prices. Japan imports over 90% of their energy commodities , so continued rise in oil prices has added to downside and eroded some safe haven appeal. The BoJ and MoF’s reluctance to intervene to stop the rapid depreciation in the JPY in recent weeks has been noticeable. As long as they just voice their dislike but fail to act, the market will keep testing them and shorting the JPY. POSSIBLE BULLISH SURPRISES Catalyst that triggers speculation that the BoJ could drop YCC or hike rates or both (big upside surprises in inflation ) could trigger upside in JPY, which means inflation data will be important to keep on the radar. Catalysts that trigger meaningful corrections in US10Y (less hawkish Fed, faster deceleration in US inflation , faster deceleration in US growth) or meaningful bouts of risk off sentiment could trigger bullish reactions from the JPY. Any catalyst that triggers meaningful downside in key commodities like Oil (deteriorating demand outlook, ease in supply shortage) could trigger bullish JPY reactions. Any intervention from the BoJ or MoF to stop JPY depreciation (buying the JPY or giving firm and clear lines in the sand for USDJPY ) could offer decent reprieve for the JPY. POSSIBLE BEARISH SURPRISES With yield differentials playing such a huge role for the JPY, any catalysts that push US10Y higher (more aggressive Fed, further acceleration in US inflation , better-than-expected US growth data) could trigger further bearish price action for the JPY. Any catalyst that creates further upside in oil prices (further supply concerns, geopolitical tensions) poses downside risks for Japan’s current account surplus and could trigger further bearish reactions in the JPY. Further reluctance from the BoJ and MoF to address the concerning depreciation in the JPY, and further reluctance from the BoJ to pivot away from very dovish policy is a continued negative driver for the JPY to keep on the radar. If the BoJ pushes back against calls for a policy shift despite upside surprise in CPI could trigger further JPY downside. BIGGER PICTURE The bigger picture remains bleak for the JPY, especially after the BoJ once again stuck to the same overly dovish script at their June meeting. As long as US10Y gains ground and as long as the BoJ stays stubbornly dovish and no push back is made against the JPY weakness from the BoJ or MoF, the bias remains lower. Take note that positioning has been stretched (tactically and CFTC) for some time, which means we don’t want to chase the JPY lower and bullish reactions can see outsized upside. It also means watching incoming CPI data closely as any huge upside surprises could trigger speculation of a possible policy shift.
by thunderpips
1
EURJPY 4hour Analysis July 17th, 2022EURJPY Bearish Idea Weekly Trend: Bearish Daily Trend: Bearish 4hour Trend: Bearish Trade scenario 1: Overall bearish on EJ but price action is resting at a critical zone. From here we’re ideally looking for a strong reversal near 140.000 with bearish setups we can enter short on. Look to target lower toward key support levels. Trade scenario 2: For us to consider EJ bullish we would first need to see a break of 140.000 with a higher low above. Look to target high toward key resistance levels.
Short
by ForexLeague
EUR JPY - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE In recent weeks, the persistently high inflation has seen the ECB take a more hawkish turn with the bank confirming at least a 25bsp hike for July and possibility of a 50bsp hike in September. Despite the hawkish policy shift, the concerns over fragmentation in bond spreads (BTP\Bund) as well as fears of growing stagflation risks has seen the EUR struggle to hold onto any hawkish ECB momentum. The ECB did try to comfort spread concerns with promises of a new fragmentation tool, and even though it has kept spreads from widening further, concerns remain. If the bank can convince markets that their new spread tool(s) can stop fragmentation it should be supportive for the EUR. However, with a material energy crisis facing the EZ due to the war in Ukraine, the economic prospects look bleak. Even though growth data was surprisingly resilient in Q2, fresh recession fears ramped up as recent forward-looking growth data surprised materially lower for key members like Germany and France. Based on the forward-looking signals from leading indicators we think recession is likely in the EZ and that the narrative has turned more bearish for the EUR until that improves. POSSIBLE BULLISH SURPRISES Geopolitics remains a focus, and any possible de-escalation or cease fire in Ukraine would open up a lot of EUR upside. Also keep Italian politics in mind where any successful attempt by PM Draghi to stay in power should ease spread concerns. Stagflation fears are high, with growth expected to slow while inflation stays high. Recent PMI data has invigorated recession fears, which means any materially better-than-expected growth data (Flash PMIs this week) could spark upside. Even though the ECB’s recent communication has been enough to push BTP/ Bund spreads from their recent highs the concerns remain, especially with Italian politics further exacerbating the problem. Thus, any insights or clarity regarding their new tool that convinces markets it can solve fragmentation should be supportive for the EUR. Energy concerns are still in focus, which means watching the Nord Stream 1 pipeline closely, if Russia resumes gas flows after maintenance ends this week it could see EUR upside. POSSIBLE BEARISH SURPRISES Geopolitics remain in focus, any escalation in the Ukraine war that risks including NATO would be big negative risks. Also keep Italian politics in mind, where any triggers of general elections risk further spread concerns & pressure the EUR. Spread fragmentation remains in focus, and if the ECB fail to calm fears or even walks back on recent hawkish comments it could trigger bearish reactions in the EUR. Growth concerns continue weighing on the EUR and means incoming growth data (Flash PMIs this week) will be in focus, where any major negative surprises could trigger downside. We've seen a chunky repricing in hike expectations over the past three weeks, and any further lower repricing is expected to weigh on the EUR. Energy concerns are still in focus, which means watching the Nord Stream 1 pipeline closely, if Russia keeps gas flows closed after maintenance ends this week it could see EUR downside. BIGGER PICTURE The fundamental outlook for the EUR has shifted to bearish with recent leading indicators pointing to a much faster economic slowdown than markets had previously expected. There are bearish and bullish factors in play right now though. On the bearish side we have geopolitics, stagflation, spread fragmentation and energy concerns acting as negative drivers. But we also have hawkish ECB policy as a possible supportive driver. Recession risks does open up a narrative change for the EUR which will require markets to change their forecasts to reflect higher recession risks which should continue to weigh on the EUR. JPY FUNDAMENTAL OUTLOOK: BEARISH BASELINE The Yen has seen a lot of depreciation this year driven by very negative fundamentals. Yield differentials has by far had the biggest negative impact. With other major central banks starting aggressive hiking cycles, it has lifted yields quite dramatically, which has seen yields like US10Y push considerably higher than 10-year Japanese yields capped at 0.25% by yield curve control. That means dovish monetary policy remains a key negative driver. Despite inflation starting to push higher in Japan, and despite the lessons from other central banks now struggling with inflation last seen since the 70’s, the bank has once again at their June meeting stayed stubbornly dovish keeping yields capped at 0.25%. At this stage the bank is playing a very dangerous game by allowing the JPY to weaken, further adding to inflationary risks. Their dovish persistence remains a negative for the JPY. Even though the JPY is considered a safe haven, inflows has been limited compared to other cycles. The reason is Japan’s current account surplus (a main reason for safe haven appeal) has deteriorated due to the rise in commodity prices. Japan imports over 90% of their energy commodities, so continued rise in oil prices has added to downside and eroded some safe haven appeal. The BoJ and MoF’s reluctance to intervene to stop the rapid depreciation in the JPY in recent weeks has been noticeable. As long as they just voice their dislike but fail to act, the market will keep testing them and shorting the JPY. POSSIBLE BULLISH SURPRISES Catalyst that triggers speculation that the BoJ could drop YCC or hike rates or both (big upside surprises in inflation) could trigger upside in JPY, which means inflation data will be important to keep on the radar. Catalysts that trigger meaningful corrections in US10Y (less hawkish Fed, faster deceleration in US inflation, faster deceleration in US growth) or meaningful bouts of risk off sentiment could trigger bullish reactions from the JPY. Any catalyst that triggers meaningful downside in key commodities like Oil (deteriorating demand outlook, ease in supply shortage) could trigger bullish JPY reactions. Any intervention from the BoJ or MoF to stop JPY depreciation (buying the JPY or giving firm and clear lines in the sand for USDJPY) could offer decent reprieve for the JPY. POSSIBLE BEARISH SURPRISES With yield differentials playing such a huge role for the JPY, any catalysts that push US10Y higher (more aggressive Fed, further acceleration in US inflation, better-than-expected US growth data) could trigger further bearish price action for the JPY. Any catalyst that creates further upside in oil prices (further supply concerns, geopolitical tensions) poses downside risks for Japan’s current account surplus and could trigger further bearish reactions in the JPY. Further reluctance from the BoJ and MoF to address the concerning depreciation in the JPY, and further reluctance from the BoJ to pivot away from very dovish policy is a continued negative driver for the JPY to keep on the radar. If the BoJ pushes back against calls for a policy shift despite upside surprise in CPI could trigger further JPY downside. BIGGER PICTURE The bigger picture remains bleak for the JPY, especially after the BoJ once again stuck to the same overly dovish script at their June meeting. As long as US10Y gains ground and as long as the BoJ stays stubbornly dovish and no push back is made against the JPY weakness from the BoJ or MoF, the bias remains lower. Take note that positioning has been stretched (tactically and CFTC) for some time, which means we don’t want to chase the JPY lower and bullish reactions can see outsized upside. It also means watching incoming CPI data closely as any huge upside surprises could trigger speculation of a possible policy shift.
by thunderpips
EURJPY 4hour Analysis July 10th, 2022EURJPY Bearish Idea Weekly Trend: Bearish Daily Trend: Bearish 4hour Trend: Bearish Trade scenario 1: We are now bearish on all major timeframes on EJ. This week we’ll be looking for bearish continuations. Ideally, price action reverses closer to 140.000 and forms a 4hour lower high. If this happens we will look to enter short on strong bearish setups confirming the lower high. Look to target lower toward major support levels. Trade scenario 2: For us to consider EJ bullish again we would need to see a break above 140.000 with a significant higher low above.
Short
by ForexLeague
EUR JPY - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE The EUR has had a bumpy ride over the past few months. At the onset of the war in Ukraine the EUR tumbled across the board. However, in recent weeks, the persistently high inflation has seen the ECB take a more hawkish turn with the bank confirming at least a 25bsp hike for July and possibility of a 50bsp hike in September. Despite the hawkish policy shift, the concerns over fragmentation in bond spreads (BTP\Bund) as well as fears of growing stagflation risks has seen the EUR struggle to hold onto any hawkish ECB momentum. The ECB did try to comfort spread concerns with promises of a new fragmentation tool, and even though it has kept spread from widening further, concerns remain. If the bank can convince markets that their new spread tool(s) can stop fragmentation it should be supportive for the EUR. The bank did back up their attempts at calming fragmentation fears after an ad-hoc meeting by saying they are looking at introducing an additional ‘tool’ as quick as possible, so markets will be focused on any insights into what that tool might be. Even though growth data has been surprisingly resilient in the past few months, the recession fears ramped up growth data continuing to surprise lower for key EU countries like Germany and France. Based on the forward-looking signals from leading indicators we think recession is likely in the EZ and that the narrative will turn more bearish for the EUR in the weeks ahead. POSSIBLE BULLISH SURPRISES Geopolitics remains a focus for the EUR, where any possible de-escalation or cease fire in the Ukraine war would open up a lot of appreciation for the EUR. Stagflation fears are high right now for the Eurozone, with growth expected to slow while inflation stays persistently high. Recent PMI data has invigorated recession fears, which means any materially better-than-expected growth data could spark some upside for the single currency. Even though the ECB’s recent communication has been enough to push BTP/ Bund spreads from their recent highs the concerns remain. Thus, any insights, clarity regarding their new tools that convinces markets it can solve fragmentation should be supportive for the USD. POSSIBLE BEARISH SURPRISES Spread fragmentation remains in focus, and if ECB speak in the week ahead fails to calm fears or walks back on recent hawkish comments it could trigger bearish reactions in the EUR. Flash PMIs confirmed growth risks in the EU is very much alive, we expect growth concerns to continue weighing on the EUR and means incoming growth data will be in focus. Watch those hike expectations. With a lot of froth recent baked into STIR markets for the ECB, we've seen a chunky repricing in hike expectations and any further lower repricing is expected to weigh on the single currency. BIGGER PICTURE The fundamental outlook for the EUR has shifted to bearish with recent leading indicators pointing to a much faster economic slowdown than markets had previously expected. On the bearish side we have geopolitics, stagflation and spread fragmentation acting as negative drivers. But we also have hawkish ECB policy as a possible supportive driver. The disappointing data does open up a potential narrative change for EURGBP as well as the EURJPY so key pairs to keep on the radar in weeks ahead. JPY FUNDAMENTAL OUTLOOK: BEARISH BASELINE The Yen has seen a lot of depreciation this year driven by very negative fundamentals. Yield differentials has by far had the biggest negative impact. With other major central banks starting aggressive hiking cycles, it has lifted yields quite dramatically, which has seen yields like US10Y push considerably higher than 10-year Japanese yields capped at 0.25% by yield curve control. That means dovish monetary policy remains a key negative driver. Despite inflation starting to push higher in Japan, and despite the lessons from other central banks now struggling with inflation last seen since the 70’s, the bank has once again at their June meeting stayed stubbornly dovish keeping yields capped at 0.25%. At this stage the bank is playing a very dangerous game by allowing the JPY to weaken, further adding to inflationary risks. Their dovish persistence remains a negative for the JPY. Even though the JPY is considered a safe haven, inflows has been limited compared to other cycles. The reason is Japan’s current account surplus (a main reason for safe haven appeal) has deteriorated due to the rise in commodity prices. Japan imports over 90% of their energy commodities, so continued rise in oil prices has added to downside and eroded some safe haven appeal. The BoJ and MoF’s reluctance to intervene to stop the rapid depreciation in the JPY in recent weeks has been noticeable. As long as they just voice their dislike but fail to act, the market will keep testing them and shorting the JPY. POSSIBLE BULLISH SURPRISES Catalyst that triggers speculation that the BoJ could drop YCC or hike rates or both (big upside surprises in inflation) could trigger upside in JPY, which means inflation data will be important to keep on the radar. Catalysts that trigger meaningful corrections in US10Y (less hawkish Fed, faster deceleration in US inflation, faster deceleration in US growth) or meaningful bouts of risk off sentiment could trigger bullish reactions from the JPY. Any catalyst that triggers meaningful downside in key commodities like Oil (deteriorating demand outlook, ease in supply shortage) could trigger bullish JPY reactions. Any intervention from the BoJ or MoF to stop JPY depreciation (buying the JPY or giving firm and clear lines in the sand for USDJPY) could offer decent reprieve for the JPY. POSSIBLE BEARISH SURPRISES With yield differentials playing such a huge role for the JPY, any catalysts that push US10Y higher (more aggressive Fed, further acceleration in US inflation, better-than-expected US growth data) could trigger further bearish price action for the JPY. Any catalyst that creates further upside in oil prices (further supply concerns, geopolitical tensions) poses downside risks for Japan’s current account surplus and could trigger further bearish reactions in the JPY. Further reluctance from the BoJ and MoF to address the concerning depreciation in the JPY is a continued negative driver for the JPY to keep on the radar. BIGGER PICTURE The bigger picture remains bleak for the JPY, especially after the BoJ once again stuck to the same overly dovish script at their June meeting. As long as US10Y gains ground and as long as the BoJ stays stubbornly dovish and no push back is made against the JPY weakness from the BoJ or MoF, the bias remains lower. Take note that positioning has been stretched (tactically and CFTC) for some time, which means we don’t want to chase the JPY lower and bullish reactions can see outsized upside. Also, with this past week’s strong push lower in US10Y, there could be some opportunities for USDJPY downside ahead.
by thunderpips
1
EURJPY Sell opportunity medium-termThe EURJPY pair has been on a long-term bullish trend since the May 2020 bottom, best illustrated with the help of the Fibonacci Channel on this 1D time-frame. The price broke yesterday below the 1D MA50 (blue trend-line) for the first time since May 25, ringing the first bearish bell. The second could come from the MACD indicator, which on the 1W time-frame is close to a Bearish Cross formation. This pattern above the 1.000 mark has signaled sell-off sequences at least on the medium-term towards the 1D MA200 (orange trend-line). In fact the price action leading to today is quite similar to September 2020. After a break below of the 1D MA50 and a re-test as a Resistance resulting in a rejection, the price dropped near the 1D MA200. Same to June 22 2021. As a result we are bearish targeting 134.100 and then turning bullish towards 144.00. However, a 1D candle close below the 1D MA200 will be a bearish signal, so be ready to reverse to a sell towards the 1W MA200 (red trend-line). -------------------------------------------------------------------------------------------------------- ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** --------------------------------------------------------------------------------------------------------
Short
by TradingShot
EUR/JPY Outlook (30 June 2022)Similiar to the EURUSD, the EURJPY had been trading in a range between 142 and 144, predominately driven by price movements in the EURUSD. I had been expecting the EURJPY to climb towards 145, on the back of a weaker YEN and the previously ranging EUR. However, now that EURUSD is tumbling lower, and YEN having reached historic highs, the EURJPY could break below the 142 support level. If that happens, look for price to move towards next support of 140.
Short
by JinDao_Tai
2
EURJPY 4hour Analysis June 27th, 2022EURJPY Bullish Idea Weekly Trend: Bullish Daily Trend: Bullish 4hour Trend: Bullish Trade scenario 1: EJ is off! Looking bullish here and we are actually mid move/trade right now. Currently it looks like price action will rally into 144.000 resistance before we see any sort of reaction. For us to continue buying EJ we need to see structure above 144.000 resistance. Trade scenario 2: For us to consider EJ bearish the first step we would need to see would be strong rejection from 144.000.
Long
by ForexLeague
1
EURJPY on a double top 🦐EURJPY on the 4h chart is testing the recent highs. The market after the last bullish impulse creates 2 equals highs and is now trading over a minor support. How can i approach this scenario? I will wait for the EU market open and check for a possible break of the area. In that case i will check the opportunity for a nice short order according to the Plancton's strategy rules. --–– Follow the Shrimp 🦐 Keep in mind. 🟣 Purple structure -> Monthly structure. 🔴 Red structure -> Weekly structure. 🔵 Blue structure -> Daily structure. 🟡 Yellow structure -> 4h structure. ⚫️ Black structure -> <4h structure. Here is the Plancton0618 technical analysis , please comment below if you have any question. The ENTRY in the market will be taken only if the condition of the Plancton0618 strategy will trigger.
Short
by InkyGrip
6
EURJPY LONG IDEAJune price action has printed new highs and has now exhausted back to retest the previous high as support. We can clearly identify here the beginning of a small trend change from bearish to bullish. Current confluences reinforcing a long bias are the new high higher high, bullish trend change, potential inverted head and shoulders pattern, support rejected, Daily time frame bullish engulfing candle / morning star followed by a weekly time frame low test. A valid exhaustion back into the proposed new higher low level will create the long zone.
Long
by THE_GOLDEN_SUITE
1