EUR/JPY Fundamental Forecast week of July 18, 2016

The EUR/JPY gained 4.14% as the yen soared on risk on trading again after the coup in Turkey and a terrorist attack in Nice. The pair climbed to 115.75. The yen also fell against other major currencies, slipping 0.3 percent against both the euro and British pound.

Data from China overnight showed growth. Industrial output and retail sales all beat forecasts, indicating there was some resilience in the economy.

Speculation that Japan was considering an unorthodox monetary stimulus measure known as helicopter money, stoked by reports that former Fed Chairman Ben Bernanke had met with high-ranking Japanese officials in Tokyo, helped kick-start the dollar rally early in the week. Though officials pushed back against this idea later in the week.

A stunning electoral victory by Japanese Prime Minister Shinzo Abe’s Liberal Democrats in an important upper-house election over the weekend reinforced the notion that the Bank of Japan will further expand its monetary easing efforts at a policy meeting later this month.

“The market was very long yen as a haven play ahead of the U.K. referendum and the weak U.S. data,” said Kit Juckes, chief currency strategist at Société Générale. “There is a lot of longs getting shaken out very fast.”

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.