Forex Trading: EUR/JPY
Posted by Byung Koo at 6:21 pm
In this article we will discuss our view on the EUR/JPY , related to short term goals.
In my opinion the Yen will be the most favored funding currency in 2010. With this in the back of my mind my outlook for EUR/JPY are set to be higher on short term (see graphic). In our view we won’t see don’t a major correction in the first quarter of this year. For the rest of the year we are bearish about the stock markets.
Mulder Currency Fund has already taken a small position on 132 and we will increase our position around the level of 131. We will put a stoploss order at 129.50. Whenever the EUR/JPY breaks 130, it will plummet down to 127-128 levels, levels we saw mid December 2009.
In this case resistance levels are at: 133.25, 133,90, 134.50 and 136,50.
Main resistance levels are at 137-138 this year.
A big indicator you could follow before you take any positions is the cost for short term borrowing in Japanese Yen. Compare the YEN Libor 3 months and USD Libor 3 months.
When the YEN Libor is below the USD Libor this could benefit long positions in EUR/JPY. The JPY will be weaker because investors will switch the carry trade from USD to Yen.
Click for the latest Libor rates
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