What's next for EUR/JPY
MUFG Research discusses EUR/JPY outlook and adopts a bearish bias on the back of the intensified concerns over the outlook for global growth, especially in the eurozone.
"The yield spread between the 3-month and 10-year US Treasury bonds has moved into negative territory for the first time since 2007 which provides a leading signal that the economic expansion is moving closer to an end. At the same time, the yield on the 10-year German government bond has moved back into negative territory for the first time since the autumn of 2016 providing a further signal over the building pessimism over the outlook for global growth," MUFG notes.
"The disappointing economic data is playing a role in intensifying global growth concerns in particular in Europe. The much weaker than expected euro-zone PMI surveys have put a dampener on any talk of green shoots emerging for the eurozone economy in the near-term...The weak growth outlook in the euro-zone continues to weigh on the euro and has prevented EUR/USD from rising on the back of the dramatic dovish shift in Fed policy and recent inversion of the US yield curve. EUR/JPY is currently testing support at the 124.00-level," MUFG adds.
For bank trade ideas, check out eFX Plus.
