Saturday, April 21, 2018
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EUR/JPY Has Been Dead Money For Four Weeks
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  • The cross has been restricted to a range of 132.50-129.00.
  • Risk reversals show falling demand for EUR puts (bearish bets).
  • The daily chart shows death cross risks.

EUR/JPY has been going nowhere, trading largely in a sideways manner in the range of 132.50-129.00.

Meanwhile, the one-month 25 delta risk reversals (EUR JPY 1 MRR) are being paid at 1.05 EUR puts – the highest level since early Feb vs 1.40 EUR puts on March 23 and 2.85 EUR puts on Feb. 12.

The decline in the implied volatility premium for the EUR puts indicates falling demand for the bearish bets.

Further, the daily chart shows the 50-day moving average will likely cut the 200-day moving average from above in the next few days. The technical indicator, popularly known as the “death cross” (a lagging bearish indicator).

EUR/JPY Technical Levels

A clear move above 131.30 (April 2 high) would allow a test of supply around 131.82 (March 27 high) and 132.05 (200-day MA). On the downside, breach of support at 129.99 (previous day’s low) could yield a deeper pullback to 129.35 (March 5 low) and 128.94 (March 23 low).

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