Analysts at Societe Generale continue to adhere to the long-term bullish outlook for the euro / yen, noting that a 10% increase in the cross would return it in real terms to the 2007 and 2014 levels. “The yield differential steadily declines in favor of the euro, and this trend will persist until the Bank of Japan restrains the yield indicators of Japanese government bonds. The “fair value” of EUR / JPY is around 137, so in this sense, the pair still has growth potential, while taking into account such a key factor as the ECB’s intentions to begin normalizing the policy much earlier than the Bank of Japan.
SocGen experts note that on the charts EUR / JPY accelerated the growth rate, started in June, after a successful breakthrough of the uplink and a multi-year level in the 127.50 / 126 area. “The pair faced the first resistance in the area of 134.40 (61.8% of the correction in 2014-2016), while short-term Momentum indicators are giving signals of overbought, which in the aggregate promises a pair of pullbacks in the short term. In the end, the price will still resume growth in the direction of 137 / 137.50 and 141.00, 76.4% correction, and more important resistance formed by the trend line, which started back in 1980. This will be an insurmountable barrier for the pair, “- believe in SocGen.