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Cross Surges Through Close, Clears to Best Levels Since Dec

EURJPY
  • Persistent JPY weakness through the Wednesday session, twinned with EUR/USD demand into the WMR fix has resulted in a decent rally for EUR/JPY here, a move that's prompted new YTD highs and a crack above the 50-dma of 159.32.
  • Retracement levels are next up, with 160.07 and 161.69 marking the 61.8% and 76.4% retracement of the Nov 16 - Dec 7 bear leg.
  • Today's rally puts the cross well clear of Y156.00, which marks the surveyed analyst consensus for Q1 for EUR/JPY.
  • Near-term vols for EUR/JPY remain supported, but have drifted through the turn of the year. 3m implied trades either side of 9.5 points, keeping implied just below the rolling 12m average. The slight fade in vols has worked in favour of EUR/JPY call vol, as 3m risk reversals inch to the best level since the mid-Dec pullback, at 1.4 points in favour of puts.
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