EUR/JPY is trading firmer, presently up at 132.40, recovering from the losses seen overnight in Asia. There Japanese life insurance companies were seen as notable sellers of the cross. They might well be in again tonight, but the downside for the cross is looking somewhat limited at the present time.
As mentioned in earlier USD/JPY commentary, the JPY is soon going to lose the support of year end repatriation flows and will then be vulnerable to a list of negative fundamentals. And here are some of the negative fundamentals it’ll have to fight against; an ever deepening recession with absolutely no end in sight (Tankan survey due out April 1 expected to make very grim reading); collapsing exports as evidenced by the trade data out overnight (in February exports saw a huge 49.4% y/y decline); and a grid-locked political system which hinders the formation of policy to help combat the recession.
The 130.80/131.00 area is now expected to provide support for the cross on any pullbacks.