10 Oct 2013
EUR/JPY is trading higher on weaker JPY, Japanese solid data
FXstreet.com (Athens) – The EUR/JPY is trading higher since the kick off of the Asian trading session, mainly due to the Nikkei sharp gains (+0.5%) leading to a weakening Japanese currency, as well as on the solid Japanese data released pertaining to machinery orders.
EUR/JPY upwards, as solid Japanese machinery data support “Abenomics” path
Apart from the last couple of hours, the cross has been trading significantly higher since the early Asian trading session. Despite we are still amidst the US default impasse it seems that there is a wide underlying expectation that both US issues (government shutdown as well as debt-ceiling raising) will be sorted out simultaneously even at the 12th hour. Thus, risk-on sentiment strikes back and Japanese crosses move higher. Apart from the positive wide expectation on the US debt default– which hit the “snooze” button to the risk-aversion mode – the cross is also trading higher today due to the solid machinery orders released in Japan but also to the stops being hit around the 131.60 area (due to short-covering).
Most of all, it seems that the cross is trading on the upper side mostly due to the very encouraging (even totally out-of-the blue) machinery data released, because the very stronger machinery orders from Japan regarding the last month of summer, indicates that “Abenomics” is for the moment a very successful policy at boosting capital investment. Last but not least, Nikkei is up 0.53% and as it widely known there is a heavy negative correlation between the Japanese currency and the Nikkei index, as it is more than plausible that when Nikkei is up the risk-sentiment is “on”, therefore the Japanese currency loses significantly its safen haven appeal.
Technical Outlook on EYR/JPY
Karen Jones, Head Technical Analyst at Commerzbank suggests that "the EUR/JPY’s attention reverted very quickly back to the 131.07/130.66 3 month uptrend, this is currently holding but we suspect will give way shortly. The 20 day ma offers minor resistance at 132.62.Stronger resistance lies at 133.82 (May high) ahead of the 134.95 recent high.Recently we saw the market climb into new highs for the year, but the rather large divergence of the weekly RSI suggests that this is likely to be the end of the up move for now. Below 130.66 will trigger losses to 127.97 August low en route to 125.31/124.94, the 23.6% retracement of the move higher from the July 2012 low."
EUR/JPY upwards, as solid Japanese machinery data support “Abenomics” path
Apart from the last couple of hours, the cross has been trading significantly higher since the early Asian trading session. Despite we are still amidst the US default impasse it seems that there is a wide underlying expectation that both US issues (government shutdown as well as debt-ceiling raising) will be sorted out simultaneously even at the 12th hour. Thus, risk-on sentiment strikes back and Japanese crosses move higher. Apart from the positive wide expectation on the US debt default– which hit the “snooze” button to the risk-aversion mode – the cross is also trading higher today due to the solid machinery orders released in Japan but also to the stops being hit around the 131.60 area (due to short-covering).
Most of all, it seems that the cross is trading on the upper side mostly due to the very encouraging (even totally out-of-the blue) machinery data released, because the very stronger machinery orders from Japan regarding the last month of summer, indicates that “Abenomics” is for the moment a very successful policy at boosting capital investment. Last but not least, Nikkei is up 0.53% and as it widely known there is a heavy negative correlation between the Japanese currency and the Nikkei index, as it is more than plausible that when Nikkei is up the risk-sentiment is “on”, therefore the Japanese currency loses significantly its safen haven appeal.
Technical Outlook on EYR/JPY
Karen Jones, Head Technical Analyst at Commerzbank suggests that "the EUR/JPY’s attention reverted very quickly back to the 131.07/130.66 3 month uptrend, this is currently holding but we suspect will give way shortly. The 20 day ma offers minor resistance at 132.62.Stronger resistance lies at 133.82 (May high) ahead of the 134.95 recent high.Recently we saw the market climb into new highs for the year, but the rather large divergence of the weekly RSI suggests that this is likely to be the end of the up move for now. Below 130.66 will trigger losses to 127.97 August low en route to 125.31/124.94, the 23.6% retracement of the move higher from the July 2012 low."