EUR/JPY seen at 128.80 in 12-month – Danske Bank

Arne Rasmussen, Head of FI Research at Danske Bank, believes the cross could head towards the 128.80 area within a year’s view.

Key Quotes

“EUR/JPY was supported by the increase in longer-dated yields, which rose on the back of the increase in the oil price”.

“Actually, the higher oil price and higher global yields are both negative for the yen. In isolation, a higher oil price is a negative for the Japanese current account given the large share of energy imports in Japan, while higher global interest rates (in particular a widening of the Japan-EU/US yields spread) supports the case for renewed portfolio outflows out of Japan”.

“We are also long EUR/JPY as one of our FX Top Trades for 2017 and even though the cross has increased substantially over the past months, we still expect it to trade higher in 2017, driven by higher global yields and inflation. We target EUR/JPY at 128.80 in 12M”.