EUR/JPY Fundamental Forecast – May 12, 2016

The EUR/JPY failed to follow-through to the upside after a two-day rally, finishing lower at 123.760, down 0.515 or -0.42%. The recent rally was fueled by a “verbal intervention” from Japanese officials earlier in the week.

Also helping to boost the Yen is the thought that an intervention by Japan won’t be an easy task especially since the action is frowned about by several countries including the U.S. Treasury. Many investors also felt that Japan would be wary of conducting direct currency intervention before it hosts a G7 meeting later this month.

Technical factors may come into play also. The recent retracement rally relieved much of the recent downside pressure, giving bearish EUR/JPY investors a chance to re-short the market at more favorable price levels. This could fuel a near-term break into at least 122.954.

Wednesday’s reversal to the downside also suggests that bearish traders are not afraid to tempt fate by aggressively shorting the EUR/JPY just a couple of days after a strong verbal intervention. The price action suggests that the bears are just daring Japanese officials to intervene and risk heavy criticism from governments and central banks, something they would rather avoid.

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.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Thursday, May 12, 2016

Government Bond Auctions

Date Time       Country           Auction

May 11 11:03 Sweden Holds bond auction

May 11 11:30 Germany Eur 5bn Jun 2018 Schatz

May 12 11:10 Italy Holds bond auction

May 12 17:20 Sweden Details of I/L auction on May 19

May 12 N/A Ireland Holds bond auction