JPY: Time To Sell EUR/JPY – BofA

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The U.S. dollar has made strong inroads against both the Japanese yen and the euro. What is the outlook for EUR/JPY?

Bank of America Global Research discusses EUR/JPY outlook and recommends going short via buying 3mth 117/113 put spread in 1×1, using spot ref 118.5

We are selling EUR/JPY: We believe JPY will be supported by domestic flow, potential success in containing COVID-19, and the BoJ’s lack of ammunition, while EUR would be undermined by the COVID-19 outbreak in Europe and as unwinding of EUR-funded carry trades may have run its course. Essentially, we are expecting JPY/USD and EUR/USD correlation to break,” BofA notes. 

“Risks to the trade are more-than-expected “unofficial intervention” by Japanese public institutions, such as the Government Pension Investment Fund (GPIF),” BofA adds. 

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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.