Home EUR/JPY: Shorts Remain A Core Trade; Should Start To Outperform – SocGen
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EUR/JPY: Shorts Remain A Core Trade; Should Start To Outperform – SocGen

The volatility continues in the FX markets. What is the long-term outlook for EUR/JPY?

Here is their view, courtesy of eFXdata:

Societe Generale Research maintains recommending short EUR/JPY as a core structural long-term trade.
“April is still winter for markets. President Trump warned last night of two terrible weeks ahead and estimates of a possible 100k-240k US deaths from the virus have spread alarm. Whatever happens, countries which have been timid about pushing social distancing and economic lockdown, are being forced to rethink and the global growth outlook continues to deteriorate in the short term, even if data from China/Taiwan continue to offer hope that the global shutdown can be over in a few months,” SocGen notes.
“The other big FX story has been the collapse of liquidity and the spike in FX volatility. Reduced liquidity hurt GBP and NOK in particular, while the spike in cross currency basis reversed the yen’s surge at the start of last month.  Liquidity is poor but improving and short-term funding issues are less. That opens the way to more yen strength ahead and short EUR/JPY is a core trade for us.  As is short EUR/GBP though that will be a slow burn,” SocGen adds.
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Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.