EUR/JPY is a classic metric of the trade but it’s been hit-and-miss since the European crisis because of the euro-specific negative factors. No one is in love with either currency because of non-existent growth and potential deflation.
Today, the pair is ripping higher on better sentiment surveys in Europe and reports of good results in bank stress tests. But the overwhelming factor is another banner day in the stock market with the S&P 500 up 2%.
The yen, meanwhile, is weak right across the board on stocks but also on reports of more potential easing in Japan.
Add it all up and EUR/JPY has climbed more than 150 pips from the start of European trading and erased two days of gains in the process. What it hasn’t been able to do is get above this week’s high of 137.01.
Watch that level.
EURJPY daily chart
The turnaround in the pair shows how quickly you can get wrongfooted in a EUR/JPY trade.
