EUR/JPY Fundamental Forecast – April 5, 2016

The EUR/JPY is trading at 127.05 as the yen gained a bit of traction against a very strong euro. The pair dipped 20 points this morning. Safe-haven currencies were doing relatively well, but that environment is starting to shift. The euro was little changed at $1.1393, hovering near a 5-1/2-month high of $1.1438 struck on Friday. The dollar brushed 111.56 on Monday, its lowest March 22, after sliding 0.8 percent versus the Japanese currency.

The Japan Times reported today that Japan will need economic measures in the second half of fiscal 2016 after Prime Minister Shinzo Abe said the government will front-load budget spending, according to the vice president of the ruling Liberal Democratic Party.

Implementing this year’s budget quickly will help address Japan’s weak consumer spending, said Masahiko Komura.

“Then naturally there will have to be something to supplement” after that, he said on NHK’s political debate program, without elaborating.

Natsuo Yamaguchi, head of Komeito, the LDP’s coalition partner, said on the same program that he suggested that Abe consider fresh economic measures after the Diet passed the budget.

Negative interest rates will make next year a difficult one for Japanese lenders, and the central bank should examine the impact of the policy before pushing them further below zero, the new head of the country’s banking lobby said.

The Bank of Japan’s decision to charge lenders on some of their reserves will generate positive effects for the industry in the long run if it pulls the country out of deflation, said Takeshi Kunibe, who starts his second stint as chairman of the Japanese Bankers Association on Friday. “But bank earnings will be negatively impacted in the short term.”

FxEmpire provides in-depth analysis for each asset 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 up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

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Tuesday, April 5, 2016