EUR/JPY bearish trend to continue
City Index March 31, 2015 10:21 PM
<p>I remain bearish on the euro in the medium-to-long-term for mostly fundamental factors. As I want to take a longer-term view, all I need to […]</p>
I remain bearish on the euro in the medium-to-long-term for mostly fundamental factors. As I want to take a longer-term view, all I need to do is find a currency that has strong technical or fundamental factors to trade with against the euro. So for me, it’s just a process of elimination.
I’m still a long-term bear of the EUR/GBP but am scared off this pair for April for fear the UK general election could upset what I see as fairly transparent dynamics (a weak euro and strong pound). I worry that the election uncertainty could hurt the pound in the short term. So for April, I am staying clear of trading the pound.
So I move onto the EUR/JPY and for me, the continuation of its long-term bearish trend remains prudent. There are technical and fundamental factors that convince me of the yen’s strength against the euro.
On a technical front, the euro’s failure to consolidate above the Y131.50 level is an important resistance barrier that must be broken before further upside can prevail. This convinces me that more downside and a revisit of the Y127.00 major support level could be on the cards.
On a fundamental front, as my colleague Ashraf has previously said, Japan’s increasing export competitiveness will make its currency more in demand as purchasers abroad need yen to buy Japanese goods.
So this looks to me as a fairly confident trade setup. An upside break of the Y131.50 barrier, however, would change my thinking on this pair.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.