BOJ vs ECB: Higher hopes for BoJ movements will support EURJPY - BNPP

Research Team at BNP Paribas, suggests that the divergent performance of the EUR and JPY likely reflects stretched long positioning in the latter and possibly greater anticipation that next week’s BOJ meeting will bring new easing measures in contrast to expectations for unchanged policy at this week’s ECB meeting.

Key Quotes

“We remain bearish on the USD vs. the funding currencies, and remain long EURUSD targeting a move up to 1.16 while looking for EURJPY to also regain further ground to at least 125. EURUSD is managing to advance despite the better risk climate, with the pair now having reversed most of last week’s losses, but the USD manages to hold up better vs the JPY. Japan’s March trade data showed a further improvement this morning with the surplus (sa) reaching new post-2011 highs. Japan’s increasing trade balance means robust investor outflows are increasingly important in preventing renewed JPY strength.”