EUR/JPY nears 2020 highs – are the bulls ready to show?

Justin Freeman
A globe projected from a mans finger

Although it has shown itself to be a bit of a slow starter over the last few months, things appear to be beginning to heat up for the EUR/JPY.

This was particularly true in recent weeks, where the EUR/JPY hit weekly lows of 124.30 in light of the continued selling pressure hitting the Japanese currency.

Although it was not a stellar month for the JPY overall, the EUR/JPY did manage to bounce around between 124.10 and 125.80, which seems to be where resistance was holding out.

Also contributing to what seems to be a bullish trend in the JPY is the news that the dollar’s recovery seems to be running out of steam, particularly with the details of the much-awaited stimulus package apparently stalled for the time being.

Coming off the back of weekly highs of 125.59, as reported in last week’s forex news, a surge to a daily high of almost 126.00 seems to indicate the emergence of a bullish trend, though the bulls did pull back slightly having hit this.

With a view to the rest of August, some market analysts are suggesting that we could see the EUR/JPY stretch to 127.55, which was the November 2018 low.

According to the forex trading analysts over at DailyFX, there are two possible paths here.

Firstly, a break below 123.79 could send the EUR/JPY spiralling down to 122.84 – or, secondly, a break above 126.08 could spark a rally towards 127.55.

Japan’s macroeconomic calendar didn’t offer much strong hope as of this Wednesday, as government officials published the July Money Supply M2+CD data (a measure of all the JPY in current circulation), which indicated an increase to 7.9% from 7.2% the previous month.

The M2+CD is an important market indicator that tends to give forex trading market watchers an indication of the state of the economy in terms of inflation, and a positive trend is considered good for the overall economy.

With all that said, it remains to be seen whether the release of this forex news will have much of a long-term general impact on the JPY.

There is still quite a lot of uncertainty surrounding the JPY and its relationship to other currencies, particularly the USD, with the impact of this on the economy still unknown.

While the USD/JPY has found some support in recent weeks between 105.00 and 106.50, the impact of events such as the much-awaited stimulus package and the possibility of trade talks remains to be seen.

It seems, then, that this uncertainty could see a route towards ‘safe-haven’ currencies such as the USD/JPY, the EUR/JPY, and the GBP/JPY.

With so much volatility in the markets, safe-haven currencies like these are a great way of mitigating your risk exposure.

If the last few weeks are anything to go by, there is still quite a lot of market volatility lurking in the mist as the full economic impact of the COVID-19 pandemic begins to reveal itself.


Justin Freeman

Latest news

Forex vs Crypto: What’s Better For Beginner Traders?
The crypto and forex markets are two of the world’s most popular among investors and traders. Read more
Three Great Technical Analysis Tools for Forex Trading
You don’t have to be very technical minded to make use of technical analysis in your forex trading. Read more

Safest Forex Brokers 2024

Broker Info Best In Customer Satisfaction Score
#1 Blackbull LogoYour capital is at risk Founded: 2014 Global Forex Broker
Number One Broker
BEST SPREADS Visit broker
4.8
#2 AvaTrade LogoYour capital is at risk Founded: 2006 Globally regulated broker
Number One Broker
BEST CUSTOMER SUPPORT Visit broker
4.9
#3 * 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money Founded: 2008 Global CFD Provider
Number One Broker
Best Trading App Visit broker
5
#4 Between 74-89 % of retail investor accounts lose money when trading CFDs Founded: 2010 Global Forex Broker
Number One Broker
Low minimum deposit Visit broker
4.9
#5 Forex Broker eToro Logo76% of CFD traders lose money Founded: 2007 Global CFD & FX Broker
Number One Broker
ALL-INCLUSIVE TRADING PLATFORM Visit broker
4.9
#6 XM LogoYour capital is at risk Founded: 2009, 2015 and 2017 Global Forex Broker
Number One Broker
Low minimum deposit Visit broker
5
#7 FxPro LogoYour capital is at risk Founded: 2006 CFD and Cryptocurrency Broker
Number One Broker
CFD and Cryptocurrency Visit broker
5

    Forex Fraud Certified Brokers

    eToro Logo
    AvaTrade logo
    BlackBull Logo Small
    XM Logo
    FXTM Logo
    FxPro logo
    CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.