EUR/JPY Fundamental Analysis – July 4-8, 2016 – Forecast

The EUR/JPY continued to weaken as the yen benefited from safe haven moves. The pair is trading at 114.17 as the euro remains fixated with Brexit. The Bank of Japan governor Haruhiko Kuroda said today that the Japanese central bank was prepared to infuse ample liquidity into financial markets in order to stem the rise in the yen. He said that this could be done through the existing swap arrangements it had with other central banks.

Policy makers in Japan were concerned that the rise of its currency against the US dollar would have a negative impact on its exporters who earn revenues in the US dollar. This they fear will lead its economy back into recession.

Concern that the U.K. could secede has rattled stock markets this month, wiping more than $1 trillion from global equity values last week alone. Bookmakers have been predicting a much lower chance of a “Leave” vote since last week. Central bankers including Federal Reserve Chair Janet Yellen have indicated a victory for Brexit would destabilize global markets.

Central banks across Asia pledged to take action as needed to avert any breakdown in financial-market liquidity. Bank of Japan Governor Haruhiko Kuroda and Japan’s Finance Minister Taro Aso, whose country currently heads the Group of Seven, highlighted that six major developed nation central banks have currency-swap lines at the ready to provide liquidity.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our  weekly reports and we provide daily updates and outlooks.