What No One Tells You About EUR/JPY

Hello!

Today we will talk about quite an interesting tool - EUR/JPY. This tool is attractive because it has rather high volumes of contract trades, which indicates the mutual demand and high enough level of trading relations between Japan and the Eurozone.

As we said before, the existence of a close relationship supposes the presence of a large number of traders interested in hedging in the market, which implies quite transparent positions on the instrument, regarding changing the index of large players.

An important feature of these two currencies is also the presence of negative rates and periods of deflation in countries, which indicates the non-triviality of their mutual relations.

Consider how the asset price behaves from the beginning of 2018.

Picture 1. Price chart for EUR/JPY from 01/01/2018 to 09/25/2018

As it can be seen in the Picture 1, the proximity of the interest rate to zero is the reason for the cycles, which are quite clearly expressed in the graph. Since the cycles are fairly even and pronounced, we can conclude that the market is subject to specific strict rules that are observed by transaction participants. In order to better understand the current cycle, one should turn to the positions of these traders.

Consider how the position of major traders changed over the past month.

Picture 2. The price chart of EUR/JPY and the index of major traders for this currency pair for the period from 08/25/2018 to 09/25/2018.

As we see in Picture 2, the value of the index has been gradually decreasing over the past month, which is reflected in the fact that the price has gradually increased. It indicates the strengthening of the position of the Euro in relation to the Japanese Yen.

The position of the traders also creates a moment of continuation of the uptrend in the currency pair, which is part of a more global cycle.

Due to the current situation and the prospects for the asset, we propose to take a bullish position and adjust the strategy to invest in INCREASING of EUR/JPY.