EUR JPY

USD/JPY remains by far the most bullish of the major yen crosses...

With EUR/JPY and GBP/JPY testing critical support, price action over the next 30 hours will go a long way toward determining if the year-to-date trends extend or end from here...

Asian equity markets were lower following China's trade data, yet US yields and the dollar pulled back to help AUD/USD hold above its cycle lows. I continue to suspect EUR/JPY has topped out on the daily chart, and today highlight a potential short setup beneath a resistance zone.

The combination of a verbal BOJ warning shot and relatively dovish comments from an ECB official saw EUR/JPY suffer its worst session in five weeks on Thursday. Given the increased odds that yen weakness is very near (or at) a turning point, I am going to stick my neck on the line and speculate that EUR/JPY has topped for now. We also take a look at the USD/JPY 1hour chart ahead of today’s NFP report.

The Japanese yen continues to weaken amidst quiet trade to start the week...

The market is likely to keep pushing the yen lower in the coming days and weeks until the BOJ takes decisive action to stem the bleeding.

The USD/JPY outlook now hinges more on the decision from the Fed than the BoJ. Meanwhile, the EUR/JPY hit a new high for the year above 158.00, before pulling back a touch. The ECB’s decision will be watched closely next week as it has the potential to move the euro crosses sharply, including the EUR/JPY.

The yen has rallied across the board over the last week+, but traders may now look to take profits on USD/JPY, EUR/JPY, and GBP/JPY ahead of the weekend...

..especially against currencies where the central bank is deemed to be slightly more dovish than the ECB

…But in which direction?

The ECB has indicated that further normalisation of interest rates “will be appropriate.”

If the ECB delivers a 50 bp hike, this will further increase the disparity between Japan and Eurozone monetary policies, supporting the EUR/JPY.

Will EUR/JPY continue moving higher? The next directional move for the pair could depend of the outcome of these meetings on Thursday!

In addition to EUR/USD moving lower, EUR/JPY could continue lower as well, as the Yen is also considered a safe haven currency.

The EUR/JPY should remain supported on the dips, keeping that path of least resistance to the upside.

The conclusion of today’s ECB meeting is the only game in town today, which has seen the yen and euro rise against the dollar just hours ahead of it.

EUR/JPY may have caught on late, but it is moving higher with Bund yields in parabolic fashion.