The Japanese Yen (JPY) has been steaming ahead against the Swiss Franc (CHF) and a number of major currencies. This increase coincides with trade-related uncertainties between the U.S. and China forcing investors into safe-haven assets like gold. As a result of this, on Monday the EUR/JPY currency pair opened weaker, declining below the 163.00 level during the Asian trading session. This drop, after a three-week high close to the 163.75 level, is a testament to evolving market conditions.
Mixed messages from the US and China in recent weeks have left investors spooked. Consequently, a flight-to-safety response is pushing many back towards the JPY, a currency classically favored as a safe-haven during periods of unrest. The Yen played its traditionally volatile role, as its geopolitical safe-haven characteristics were put on display in its relative strength to other major currencies. In global trading, it was up 0.16% against the Dollar, 0.13% against the Euro and 0.15% against the British Pound. It was up by 0.17% against the Canadian Dollar (CAD) and as well as the Australian Dollar (AUD). In furthering advancing, it increased by 0.18% against Swiss Franc (CHF).
Despite these positive developments, the EUR/JPY cross is burdened by an absence of bearish conviction. Analysts point out that although the Yen draws in aggressive short sellers, Yen shorts are met by resistance, keeping bullish JPY speculators from aggressive bets. The currency pair has been one of the most volatile. It has retreated some from recent highs but as of yet has not established a definitive downward pattern. Consequently, the absence of firm guidance has kept traders on the sidelines.
The recent surge above the EUR/JPY 200-day Simple Moving Average (SMA) raises some eyebrows. Market participants, particularly those who are currently positioned bearishly in the market, need to take it very seriously. Even if this technical signal would normally suggest potential upward momentum, that is currently tempered by ongoing concerns regarding inflation in Japan. With recent signs of broadening inflation, the door has been opened for the Bank of Japan (BoJ) to deliver more rate hikes before year’s end. Even just these possible hikes would material to sent the JPY soaring in value.
The table below illustrates the percentage changes of the Japanese Yen against various major currencies:
| Currency Pair | Percentage Change ||