EUR/JPY Weekly Fundamental Analysis – week of May 30, 2016

The EUR/JPY will start the new week at 122.85 dipping 0.80% on the week as the Japanese strengthened after the G7 meeting and a better expected inflation print.  The dollar also rose against the yen Friday. But analysts mainly attributed the moves to a reversal of the risk-averse sentiment that had fueled demand for the yen as a haven currency earlier this year.

“Market talk of uncertainty” has dissipated as oil prices have stabilized, equity markets have been pushing higher and economic data in the U.S. have been improving, said Juan Perez, a currency trader at Tempus Inc.

As a result, the yen’s haven status has been challenged, while at the same time Japan’s economy remains under deflationary pressures–both of which weighed on the yen Friday, according to Perez.

Late Friday, the dollar was changing hands at 110.33, compared with 109.75 late Thursday in New York.

Breaking above 110.00 is a critical level for the greenback, according to Shinichiro Kadota, vice president of research at Barclays in Tokyo, as during recent sessions the dollar was caught in a pattern where “it struggles to go up after breaking above Yen110.00, but shows a rebound when it falls below 109.50.”

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.

Major Economic Events for the week: