In the trend of Euro/Yen, since the introduction of Euro in January 1999, we can notice, as a whole, 4 different macro-phases:

Phase I (Jan 1999 – Oct 2000): falling down.

After being exchanged in the 132.50-135.50 area, just after the start of transactions in January 1999, the cross  EurYen fell to a historical low at 88.97 on October 26th, 2000.

Phase II (Nov 2000 – Jul 2008): strong euro rally.

Since November 2000, there is the developing of a long phase dominated by a strong Euro, with the yen systematically sold and used as a funding currency, in order to finance investments in asset classes denominated in other currencies. This carry-trade activity brought to a “currency bubble”, which kept inflating till the burst of the real estate-financial bubble in Summer 2007. The cross reached a historical high at 169.95 in July 2008 (+91% vs. the year 2000-bottom).

Phase III (Aug 2008 –  July 2012): euro’s collapse

With the burst of the real estate-financial bubble, since Summer 2007 and with an acceleration after Lehman Brothers’ bankruptcy in September 2008, a progressive strong disinvestment out of the major world Bourses brought to heavy buying of Japanese yens in order to square-up the enormous carry trade positions accumulated in the years before. That brought to a collapse of the cross euro/yen, fuelled by a double drive: the fall of the euro vs. the US dollar together with the fall of the US dollar vs. the Yen. The cross collapsed to a low at 94.12 on July 24th 2012 (-44.6% from the historical high).

Phase IV (July 2012- today): strong euro’s recovery.

Since the end of July 2012, a really strong rally was favored by the first cheering-up signals in the euro-zone favoured by the Ecb’s moral suasion – that contributed to a renewed risk-on attitude in the financial markets – together with the aggressive monetary easing that has been implemented by the Abe administration since the end of 2012 (Abenomics). The cross reaches a peak at 145.70 on December 27th 2013, followed by a correction to the October 16th 2014 low at 134.14. In the last months the cross has been rising again, touching a new top on December 8th 2014 at 149.80 (+59% from the July 2012 lows), around last 6 years’ tops. In order to preserve a bullish outlook in a strategic horizon an eventual correction should remain above the key support in the 130-131 area (intermediate support at 136.20).

The current correction from the December’s top around 150 could continue towards 140 and afterwards in direction of the strong support area 134.15-136.20, where the uptrend should be resuming anyway. New bullish impulses above 148, for a new test of the peak around 150: the overcome of such resistance (premature) would push the cross towards 157.50. 


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Trend 12-18 months







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Maurizio Milano