EUR JPY

Both USD/JPY and EUR/JPY have sold off over the past week and with the BoJ policy review expected in a couple of weeks, Yen-strength scenarios seem to be gaining steam.

The EUR/JPY outlook is increasingly tuning bearish, but it must continue holding below the 160.00 handle to keep the bears happy. I reckon the pair is heading down to 155.00 in the coming days.

GBPUSD, EURJPY: Inflation indicators between the eurozone and the Japanese economy are due this week, following the jump in UK’s inflation rates next week, adding reversal potential to the dollar’s rally ahead of Trump’s presidency.

The Euro continued it’s Q4 descent against the US Dollar but it’s the recent build of bearish price action in EUR/JPY that’s of interest going into next week.

Against a backdrop of weakening economic data, looming tariffs from the US in 2025 and a struggling Chinese economy (bad for Eurozone exports), the euro outlook remains negative, putting pairs such as the EUR/USD and EUR/JPY into focus – the latter having just formed a bearish technical signal.

EUR/USD has taken a beating so far in Q4 but for the past week and the pair is testing the 1.0500 handle for a second time. For both Euro bears and Yen bulls, EUR/JPY could make for a more attractive argument for directional plays.

Yen weakness has hung around and USD/JPY and GBP/JPY both retain bullish appeal. But for those looking for Yen-strength, perhaps in anticipation of next month’s policy review from the BoJ, EUR/JPY could hold greater attraction.

USD/JPY has continued to rally up to fresh three-month-highs, but EUR/JPY has started to build bearish structure. Meanwhile a bull pennant has formed in GBP/JPY.

The EUR/USD held near 1.0850, near its lowest level since early August. The other euro crosses were mixed. However, the EUR/JPY forecast hadn’t quite turned bearish yet as it held above a key support and traders watched whether the USD/JPY pair would hold its latest attempt to break the 150.00 in response to a series of US data beats.

Conditions for euro bears have been ripe for the past three weeks with renewed bets of an ECB cut alongside scaled-back bets of ECB easing. But given the depth of the selloff on EUR/USD, it could be vulnerable to a bounce unless a dovish cut is delivered.

EUR/JPY and GBP/JPY traders have already priced in the current projected path of interest rates from the ECB, BOE, and BOJ, so the main market driver moving forward will be how those expectations evolve.

The massive “yen carry trade” unwind was technically- and sentiment-driven, and could absolutely run further after pausing for a few weeks. EUR/JPY and GBP/JPY are in play.

JPY strength has been fast and heavy: Is this but a pullback in the bigger-picture carry trade or is carry unwind in the process of taking over?

EUR/JPY pushed below a major spot of support last week, even as EUR/USD traded within a tight range. The big question now is whether EUR/JPY bears can continue the push against the JPY.

While the euro has struggled, the Japanese yen continues to roar back higher. The strengthening yen is a reflection of tightening of bond yield spread between Japan and the rest of the world, after ballooning following the years of excessive expansionary monetary policy in Japan while the rest of the world pursued a sharp contractionary policy to combat surging inflation.

It’s been a strong month for EUR/USD on the heels of the banks rate cut last month. And while they held off from any additional policy softening today, the door is open for more in the coming months.

It was a strong week for the Yen which was a change-of-pace, as pullbacks in USD/JPY and AUD/JPY were driven by a suspected intervention. The big question now is whether the response to intervention remains the same as we saw in May where it reset the tables for the carry trade to continue to drive.