Fundamental and Technical Outlook: EUR/JPY

Fundamental Outlook: EUR/JPY

During the Asia-Pacific session JPY weakened across the board following reports that the BoJ could explore delving deeper into negative interest rates, making Negative Interest Rate Policy (NIRP) the centre of future monetary easing.

The main event in today's London session will be UK employment data.

In today’s session we expect the strongest currency to be EUR as EUR tends to remain supported during times of risk-off sentiment.

The weakest currency is expected to be JPY as although JPY also remains supported during risk-off environments, the latest comments concerning further BoJ easing should keep JPY pressured.

The EURJPY pair is currently priced at 115.50.

There are several levels including the current price level which can be considered for buying opportunities:

The price levels below could be used to buy from as price retraces into them:

115.20, 114.55, 114.00

The price level below could be used to buy from as price breaks out above:

116.37

Technical Outlook: EUR/JPY



Market Opening Wrap

In Asian Equity Markets stocks fell to fresh six-week lows on Wednesday and the greenback stood strong against a broad swathe of currencies including the Japanese yen as concerns grew about the fading impact of the world's major central banks to stimulate growth. The MSCI's broadest index of Asia-Pacific stocks outside Japan lost 0.2 percent, extending its decline since late last week to 4.2 percent. Within the region, Japan's Nikkei led losers with a 0.3 percent decline as uncertainty grew ahead of a central bank policy meeting next week. The broader Topix was down 0.2 percent at 1,320.40, as the banking subindex skidded 2 percent. The JPX-Nikkei Index 400 fell 0.2 percent to 11,848.09.

In Currency Markets the yen fell broadly on Wednesday after a report that the Bank of Japan is considering further monetary easing steps, including taking interest rates deeper into negative territory. The euro added 0.5 percent to 115.670 yen and the dollar extended overnight gains and was up 0.5 percent at 103.110 yen. The euro was flat at $1.1219 after shedding 0.1 percent the previous day. The Aussie was up 0.2 percent at $0.7484 after retreating more than one percent overnight to a seven-week low of $0.7443. The Canadian dollar was a touch firmer at C$1.3077 to the dollar, putting a bit of distance between a one-month low of C$1.3190 seen on Tuesday. The dollar index was steady at 95.603.

In Commodities Markets oil prices rebounded in Asian trade on Wednesday after falling by as much as 3 percent in the previous session, as data from an industry group showed a smaller-than-expected build in U.S. crude stocks.  Brent crude futures were trading at $47.34 per barrel, up 0.5 percent, from the last settlement. U.S. West Texas Intermediate futures were up 0.7 percent, at $45.19 a barrel. The American Petroleum Institute (API) reported a crude build of 1.4 million barrels for the week ended Sept. 9, smaller than the 3.8 million-barrel rise expected by analysts. Spot gold was up 0.1 percent at $1,319.80 an ounce and spot silver was up 0.3 percent at $18.90 an ounce.

In US Equity Markets stocks fell sharply on Tuesday, with energy shares slammed by lower oil prices and financials falling on diminished prospects of a near-term rate hike.  The Dow Jones industrial average fell 1.41 percent to end at 18,066.75 points and the S&P 500 lost 1.48 percent to 2,127.02. The Nasdaq Composite fell 1.09 percent to 5,155.26. The CBOE Volatility index jumped 17 percent to 17.85. One bright spot in the market was Apple, which jumped 2.55 percent after two carriers reported strong demand for its newest smartphones. Freeport McMoRan tumbled 8.39 percent on a deal to sell some Gulf of Mexico assets to Anadarko Petroleum, which fell only 0.35 percent. Some analysts called the $2 billion deal inexpensive.

In Bond Markets long-dated Treasury yields rose to their highest levels in around three months on Tuesday on heavy Treasury and corporate debt supply and on concerns about global central bank policy. Benchmark 10-year notes fell 18/32 in price to yield 1.73 percent, after rising as high as 1.752 percent, the highest since June 3. Thirty-year bonds fell 1-16/32 in price to yield 2.468, after earlier climbing to 2.488 percent, the highest since June 23.

Source: Institute of Trading and Portfolio Management