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EURJPY Rallies 0.85%, Extends Impressive Run Higher

EURJPY
  • Broad single currency strength and a late selloff for the Japanese Yen (bolstered by the turnaround for front-end US yields) has resulted in EURJPY posting a 0.85% advance on Tuesday as we approach the APAC crossover, extending its impressive run higher throughout the second half of June.
  • Despite the pair oscillating either side of 150 in late May and early June, the sharp rally across the last eleven trading sessions equates to around a +5.2% surge, as it eats into the sharp decline witnessed in 2008.
  • On the Euro side, today’s strength comes alongside ECB terminal pricing reclaiming the 4.00% handle. Between strong US data, hawkish-leaning ECB comments from Sintra (including an MNI interview with a typically hawkish Wunsch), and anticipation of June inflation readings starting tomorrow with Italy.
  • For EURJPY, price action reinforces the current technical bullish theme after recently clearing key resistance at 151.61, the May 2 high and an important bull trigger. Moving average studies are in a bull mode position too, highlighting positive market sentiment and the topside focus is on 158.72, a Fibonacci projection.
  • The market has heard low level verbal warnings thus far from relevant officials regarding potential intervention, with any developments in this space likely to garner growing attention.
  • Yesterday, Japanese Chief Cabinet Secretary Matsuno, stressed that "it's important for FX to move stably" and that "Japanese authorities are closely watching FX moves with a high sense of urgency". This added to weekend comments from the re-appointed chief currency official Masato Kanda who reiterated their vigilance and told reporters they won’t rule out any options when it comes to handling currency matters appropriately.
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