EUR / JPY is one of the most liquid major currency pairs in FX trading. Both the euro area and Japan have a significant global weight in terms of economic output and trade volume. The Japanese yen has long been considered carry trade currency because Japan has been struggling with deflationary tendencies since the 1990s and was the first major economy to usher in a long phase of zero interest rate policy.
Investors can bet on an appreciation of the euro against the yen by trading long EUR JPY. On the other hand, investors who position themselves in reverse and trade a short position in the euro yen rely on the strength of the Japanese currency.
Characteristics of the EUR / JPY currency pair:
- Second most popular currency pair with yen participation
- Is characterized by lower volatility than USD / JPY
- Belongs to the major currency pairs
- Suitable for Forex beginners
- EUR / JPY shows strong trends over time
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Trade EUR / JPY with Forex: Process of a currency transaction
An FX business can be outlined as follows, limited to the essentials. An investor who wants to trade a long position in the euro yen with Forex initially borrows yen in the amount of the intended position size. The entire loan amount is then exchanged for euros. The debt denominated in yen is then offset by a credit in euros, so that in a (only theoretically existing) perfect market without spreads, net assets are exactly zero. If the investor is correct with a forecast and the euro appreciates, the euro balance will be exchanged in yen to repay the loan. Due to the appreciation of the euro, the entire balance does not have to be spent because the debt has lost value in the meantime.
If the trader suspects an increase in the euro currency and decides for the Trading in the currency pair EUR / JPY, the exchange from yen to euro takes place. After the euro has actually appreciated, it will be exchanged for yen. The trader's profit results from the difference between the revalued euro amount and the euro currency amount before trading. Both sizes relate to the yen.
EUR / JPY exchange rate in quantity and price quotation
The Euro Yen exchange rate can both in terms of both quantity and price quotation: one is the reciprocal of the other. In quotes, the price shows how many JPY units are traded for EUR 1.00. In price quotation, the price tells how many units EUR 1.00 JPY are to be paid.
In international currency business, quantity quotation is a common form of currency notation. While the domestic currency is always fixed in the quantity listing, it is variable in the price listing.
How to Trade the EUR USD (Warning!!)
The euro to Japanese yen currency chart
With the euro Japanese yen currency diagram, the changes in currencies can be clearly understood. This data collection provides information about the currency development of the currency pair within the past 10 years. The EUR / JPY currency chart essentially paves the way for trading strategies based on historical developments. Trend strategies or contra-trend strategies, for example, are based on reliable data in the currency diagram. In the event of a trend reversal, traders should opt for an ATR or turtle exit.
EUR / JPY currency charts increase in quality and information depending on the accuracy of the data shown. Online brokers usually offer currency charts for forex trading as part of the free use of the trading account. In addition, traders can find out about the specific Forex function.
Source xe; The graph shows the rise and fall movements of the EUR / JPY currency pair that occurred during the specified day Formulation of trading decisions.
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Experience with EUR / JPY
Large exchange rate fluctuations, or volatility for short, are typical for the EUR / JPY currency pair. A reason for Forex traders to bet on EUR / JPY. In a direct comparison to the USD / JPY currency pair, EUR / JPY is significantly behind the currency combination with the US dollar. Another popular cross rate is the AUD / JPY. The cancellation of the former carry trades led to fluctuations in the exchange rate. In 2002 the yen hit the 10-year low. Between 2005-2008, the yen appreciated. The 10-year high was reached in 2011. Due to the increasing sales pressure in recent years, Japan is ending up in an expansive fiscal policy. The sideways trend of EUR / JPY has been tracked since 2013.
The sideways trend can be explained by the euro currency, which is also under pressure to sell. Over time, the currency pair showed strong trends. For this reason, it is particularly advisable to look at the charts and data models for collecting forex experience.
Some popular major cross-rates with participation of the Japanese yen
- EUR / JPY
Some popular major cross courses with participation of the euro
- EUR / USD
- EUR / CHF
- EUR / GBP
- EUR / CAD
- EUR / AUD
- EUR / JPY
Experience with the EUR / JPY currency pair shows that forex trading can be worthwhile if you closely observe the market. Traders who are more willing to take risks rely on the currency pair USD / JPY.
Tips for Forex trading with EUR / JPY
When trading with EUR / JPY, the trade should not exceed 1 % of trading capital. With targeted trailing and movement stops, losses are better monitored. Since Japan is a country with high net international assets and low debt, the yen carries the designation safe haven currency.
- When trading Forex with the EUR / JPY currency pair always recognizable course changes. Small trends develop within days. Breakouts and ranges are also part of everyday trading for this currency pair. For Forex beginners, the trend following strategy is a good forex strategy.
- In addition to the US dollar and the euro, the Japanese yen is one of the most influential currencies in the world. Since Europe and Japan are largely independent of one another, the price fluctuations often result in longer trend phases.
- Online brokers such as eToro offer access to social media. Traders can interact with other traders and copy EUR / JPY trading decisions made by experienced Forex traders.
- The Japanese yen is often seen as a hub for other Asian currencies. For this reason, trading and market tracking of the EUR / JPY currency pair can provide information about possible developments of exotic animals with an Asian currency exposure.
- Trading success can be better if the trades are carefully noted. The notes help you to find out over time whether the EUR / JPY is actually the right currency pair for the trader or whether USD / JPY fits the trading behavior better.
Die Trend following strategy causes the newcomer to deal with the charts, analyzes and the EUR / JPY currency chart. With this currency pair, the risk of a possible loss should not be underestimated.
Conclusion: Positive recommendation for Forex trading from EUR / JPY
Trading EUR / JPY is one of the trading pairs that only make high profits possible in times of high volatility. The price movements of the euro and yen therefore tend to provide good trading opportunities in everyday life and are particularly suitable for newcomers to Forex. EUR / JPY trading with Forex is already possible with little trading experience. It is important to get to know the technical terms, such as long and short positions, the forex strategies and to interpret charts, analyzes and the EUR / JPY currency chart.
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