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5 May 2015
EUR/JPY remains a sell – DB
FXStreet (Barcelona) - Taisuke Tanaka, Strategist at Deutsche Bank, believes that EUR/JPY’s downtrend is set to resume and recommend selling the pair, and further comment on the impact of Japanese pension fund buying on USD/JPY.
Key Quotes
“Pensions have supported the USD/JPY at levels below ¥120 through buying on weakness, but they have not pursued the markets above the over-120 level. As this has limited the upside for the USD/JPY, overseas investors have unwound their yen shorts, but the downward pressure has been absorbed by pensions’ purchasing.”
“In the past two days, position adjustments have strengthened in world markets. Japanese stocks have fallen as foreigners pulled out of the significant long positions they had accumulated at high price levels.”
“On the other hand, as overseas speculators have already cut their yen shorts significantly, the downturn in the USD/JPY was modest.”
“Pensions are likely to step up their buying on weakness if the correction in Japanese stocks and the USD/JPY should deepen. We believe an effective tactics for now would be a long-building on weakness, in line with activity at pensions.”
“The euro has bounced back considerably on technical adjustments from its record short positions, but we believe the trend ahead will remain downward. We would recommend selling the EUR/JPY on rebound to around the mid ¥130 level or higher.”
Key Quotes
“Pensions have supported the USD/JPY at levels below ¥120 through buying on weakness, but they have not pursued the markets above the over-120 level. As this has limited the upside for the USD/JPY, overseas investors have unwound their yen shorts, but the downward pressure has been absorbed by pensions’ purchasing.”
“In the past two days, position adjustments have strengthened in world markets. Japanese stocks have fallen as foreigners pulled out of the significant long positions they had accumulated at high price levels.”
“On the other hand, as overseas speculators have already cut their yen shorts significantly, the downturn in the USD/JPY was modest.”
“Pensions are likely to step up their buying on weakness if the correction in Japanese stocks and the USD/JPY should deepen. We believe an effective tactics for now would be a long-building on weakness, in line with activity at pensions.”
“The euro has bounced back considerably on technical adjustments from its record short positions, but we believe the trend ahead will remain downward. We would recommend selling the EUR/JPY on rebound to around the mid ¥130 level or higher.”