The EUR/JPY is one of the most popular underlying assets with investors. This is because the euro and Japanese yen belong to different economies and hence affected by different factors.
Trading the EUR/JPY may be associated with high risk due to abrupt fluctuations typical of the Japanese yen. This is the reason why experts advise newbies not to trade this currency pair. However, strong price movements shown by the pair may also yield a decent profit.
To reduce the risks accompanying the EUR/JPY, you need to learn the factors affecting the exchange rate of the currency pair.
To make a profit on the EUR/JPY currency pair, you need to understand what factors influence its quotes. For instance, the yen is strongly affected by the Bank of Japan policy.
Although it may seem strange, but the major target of the Bank of Japan is depreciation of the Japanese national currency.
The reason is that this ensures competitiveness of the Japanese products on the world market.
The major factors affecting the rate of the euro to the Japanese yen are as follows: rise or fall in demand for Japanese computers and consumers’ electronics, change in quotes and duties on the goods imported to the United States.
By the way, there are only two digits after decimal point in the EUR/JPY quote.
To forecast the exchange rate of the EUR/JPY is rather difficult. Along with the market factors, this currency pair is impacted by the interventions conducted by the Bank of Japan. This is the reason why experts advise that this financial instrument should be traded during an intraday session. According to the experts, the best strategy to trade this pair is based on the news releases.
Even if you perform a comprehensive analysis of this currency pair and prepare a forecast following all rules and considering multiple factors, this doesn’t guarantee that the price will act in line with your projection.
Also, the Japanese yen is strongly affected by the rate of the U.S. dollar and euro. The point is that this currency is reserve in many countries around the globe. Therefore, if the euro or the U.S. dollarfalls, the rate of the Japanese yen rises. However, you need to have in mind that in this case the Bank of Japan typically starts intervening in the market, and this makes the yen fall.
The range within a trading session can include up to several hundred ticks.
The highest volume of the pair is typically traded during the Asian trading hours. The session starts at midnight and closes at 9:00 a.m. (GMT). The pair shows the highest trading intensity 8:00 a.m. to 9:00 a.m. (GMT) when the Asian and European sessions overlap.
Before trading, an investor has to analyze the pair. However, technical analysis can give only a short-term forecast in the case of this currency pair, that’s why an investor also needs to do fundamental analysis.
Political sentiment in the Eurozone and Japan is of great importance for the EUR/JPY. Announcements of the European Central Bank and the Bank of Japan officials have a significant impact on the sentiment and can be both negative and positive factors. What a trader needs to remember that the Bank of Japan policy aims to depreciate the yen, and if the yen weakens, the pair shows a rise.
The USD/JPY and EUR/USD currency pairs play a significant role as a factor affecting the EUR/JPY. This is the reason why you should perform analysis of the EUR/USD and USD/JPY before analyzing this currency pair. You need to understand what currency is oversold and overbought. This enables you to figure out invertors’ sentiment toward the European currency and the Japanese yen.
Also, you need to have in mind fundamental factors like an inflation rate in Japan and Eurozone, employment rate, key interest rates set by the Central Banks, and consumer demand.
Japan is an export country; this is why Japanese export to the world market plays a key role in the economy.
How to Make a Profit on EUR/JPY
Binary options ensure the highest profit on EUR/JPY or Bitcoin. You can make as high as 70% just in 5 to 15 minutes!
To make a profit on binary options, you need to forecast whether the price will rise or fall during some certain period. If the price acts in line with your projection, your investment immediately yields a return.
Generally, I deal with 24option, the world’s top broker regulated by the FCA, CONSOB, CySec etc. This is a reliable time-tested broker.
After doing analysis of the EUR/JPY , I expect the yen to fall next half an hour and the pair to go up following the trend.
I browse the broker’s website, select the underlying asset, that is, the EUR/JPY. I set the expiration to 5:55 p.m., select the amount of investment and click the HIGH (UP) button expecting the price to move upwards and click BUY:
If the price rises even by a tick during 10 minutes, I will make a 82% profit.
Time flies fast. At 6:00 a.m. I check the result.
My trade is successful. I’ve made a net profit of $65.6. As you see, to make a profit on the EUR/JPY is not difficult. Anyone can do it.