Despite the movements in the global variable rent market, the EUR/JPY is deviating from its usual correlations, driven by a massive sale of the dollar and repatriation flows from Europe and Japan. With the Yen considered as more undervalued and the BOJ bowing towards a more Hawkish position, the pair presents a downward bias in the short term, the FX analysts of ING, Francesco Pesole and Chris Turner point out.
EUR/JPY is disconnected from the correlation with the variable income
“The EUR/JPY has continued to challenge its normally positive correlation with the Global Variable Rent markets. The story here is the great mass sale of the dollar and the flight to the liquidity of both the euro and the Yen. Likewise, both the Europeans and the Japanese are the large communities of investors that are potentially repatriating active from the US
“However, we think that the EUR/JPY has a downward bias since the USD/JPY can fall more than the EUR/USD can recover. The yen is more undervalued in the medium term according to our models. Likewise, the BOJ remains willing to increase the rates and more inclined to give Washington the strongest currency (weaker dollar) that yearns.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
