EUR/JPY could test 120.00 in the medium term – Rabobank

Jane Foley, Senior FX Strategist at Rabobank, slipped the chance that the cross could retreat towards the 120.00 area in the next months.

Key Quotes

“EUR/JPY has been bias lower since the middle of last year and we see risk of a test of the 120 level in the coming months”.

“Although both the ECB and the BoJ are maintaining large asset purchase programmes and negative interest rates, the JPY is more likely than the EUR to be supported by safe haven inflows”.

“Although risk appetite has recovered well from the sour market sentiment exhibited in the early months of this year, we see the potential for a negative impact on risk appetite from a June Fed rate hike and from a rebound in anxiety concerning the outlook for growth in China”.

“Although the EUR has displayed some safe haven qualities over the past year or so, this could have been partly the effect of short-covering from the hefty build-up of short positions in H2 2014. We see this has now having run its course”.