EUR/JPY - Euro / Yen - Forex Currency Pair


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The EUR/JPY Currency Pair (Euro / Yen) is the exchange rate of the euro expressed in Yen. It expresses the value of a Euro in Yen.

The EUR/JPY is the 7th most traded pair and represents 3% of total transactions on the FOREX in 2010. The EUR/JPY is known for its volatility. From 2008 to 2010, the volatility of the Euro / yen has been about 210 pips. As a result, many speculators trade it on the short term to capture some of this volatility. For scalper Forex, EUR/JPY is therefore appropriate.

The most important movements on the pair will occur in response to various economic announcements that occur throughout the day mainly on the EUR, which plays a key role on the pair.

The pair EUR/JPY has also been influenced for many years by the phenomenon of the carry trade. Indeed, for many years, interest rates were kept at 0% by the Bank of Japan. European rates controlled by the ECB have them for many years been much higher than Japanese rates. As a result, investors sold the yen heavily to buy the Euro which was more profitable.

However, with the crisis, the interest rate differential has narrowed considerably and the phenomenon of the carry trade is no more up to date on this pair. As a result, the yen has appreciated considerably due to the unwinding of carry trades. For a country based on exports such as Japan, this severely penalizes the country's growth.

The pair EUR/JPY is quoted in 2 decimal places but you can sometimes find 3 with some brokers. The exchange rate is floating and therefore subject to the law of supply and demand on the interbank forex market.

Both central banks linked to the pair Euro / yen are the European Central Bank (ECB) for the EUR and the Central Bank of Japan (BoJ) for the JPY. Like other central banks, the BoJ intervenes regularly directly on the foreign exchange market to control its currency. Thus, it is not uncommon to see significant upward and downward spikes on the pair reflecting an intervention by the BoJ to depreciate the yen in particular to make increase exports of the country.

The decisions taken by both central banks also have a strong impact on the evolution of the pair EUR/JPY (interest rate changes, asset buyback program ....)

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EURO (EUR):

The Euro is the currencies of the countries member of the European Union which have adopted the Euro. The Euro was introduced on January 1st 2002 in 11 countries and gradually other countries have also adopted the Euro as shown in the map below:

EUROS

The euro is the second most traded currency on the Forex. It is present in 39.10% of transactions in 2010. Its overall share in the number of transactions increases gradually each year but still far from the dollar and its hegemony. In 2004, the euro was present in 37.40% of transactions on Forex. The Euro is a currency of reference both in the foreign exchange market and in international trade. The euro is also the first currency in terms of banknotes in circulation.

The Euro is however considered as a currency risked. Investors buy the euro if they think the global economy is healthy. However, in times of crisis, the dollar appreciates against the euro. Indeed, the dollar is considered a safe haven.

The Euro (EUR) is controlled by the European Central Bank (ECB) which is responsible for making monetary policy decisions.

YEN (JPY):

The Yen (JPY) is the national currency of Japan. The yen is the third most traded currency on the forex behind the U.S. Dollar and the Euro. The yen is present in 19% of transactions made on the Forex in 2010. This proportion is due to the fact that USD / JPY is the second most traded pair with 14% of total transactions in 2010. Japan remains a hub for the global economy. Japan's growth is mainly due to exports

It is for this reason that the government had adopted a zero interest rate monetary policy to depreciate the yen. This has been for a long time the case with the phenomenon that we know on the USD / JPY. The carry trade has ended with the crisis, significantly enhancing the value of the yen against the dollar and other currencies.

  You can see below a 10000 Yen banknote:
yen jpy

The Japanese currency is controlled by the Bank of Japan (BoJ), which is responsible for making monetary policy decisions.


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