Japanese Yen[1] Forecast Overview:
- Amid global equities climbing higher, the Japanese Yen has seen demand fade, particularly after a bout of disappointing Japanese economic data.
- None of EUR/JPY[2], GBP/JPY[3], or USD/JPY[4] have advanced into bullish breakout territory yet; but all three pairs are seen significant momentum shifts and are on the verge of challenging key resistance.
- Per the IG Client Sentiment Index[5], the Japanese Yen has a mixed bias.
Japanese Data Misses, Yen Fades
With global equities declining for the first few weeks of September, the Japanese Yen was seen on favorable terms: it was the best performing major currency alongside the US Dollar[6]. But in the last week of September, with Shinzo Abe stepping down as Japanese Prime Minister and global equities turning higher, the Yen fell out of favor. The near-term headwinds against the Japanese Yen appear to have strengthened in the past 24-hours amid two key developments, one local and one foreign.
First, the Tankan survey of large manufacturers – a BOJ-curated report that is a guidepost for policymakers – showed that the economy was rebounding at a slower than anticipated pace. Second, ongoing talks between Congressional Democrats and the Trump administration over another fiscal stimulus program have spurred risk taking in financial markets, undercutting the Yen as a safe haven.
EUR[7]/JPY RATE TECHNICAL ANALYSIS: DAILY CHART (August 2019 to October 2020) (CHART 1)
Not much has changed in recent day since our last EUR/JPY rate forecast update, insofar as the pair remains trapped within the range that we are observing. “EUR/JPY rates have recently found support in familiar territory, where the December 2019 highs were carved out after returning to the uptrend from the
