The long term outlook for the EUR/JPY at this point appears to be positive. Both Japan and the Eurozone have experienced considerable struggles in economic growth. The currency pair is an interesting juxtaposition as both economies are significantly impacted by activities in the United States. The economy which will fare better will be the one with the most effective monetary policy framework. Investors should see this as an opportunity, with potential upside for the EUR/JPY.
Investors Notes:
- Japan’s economy has shown improvement yet there are considerable fears that scaling back of stimulus by the Bank of Japan, will cause another deflationary cycle.
- As U.S. economic growth begins to accelerate, global interest rates will likely rise, resulting in tighter credit conditions for Japan.
- The Eurozone has enjoyed higher growth and improved sentiment yet is still plagued by high unemployment and the threat of deflation.
- 50 day, 100 day and 200 day moving averages are rising indicating a long-term uptrend, with price action above all moving averages.
- Confirmation of a golden cross further indicates bullish momentum.
- Banc De Binary analysts predict that Eurozone will continue to strengthen compared with the Japanese economy, indicating a potential long-term upward movement in the EUR/JPY.