Euro and Yen Cross Rate

Cross-Currency Pair: Euro and Yen

The euro and yen are among the most traded currencies globally, second only to the US dollar. Like the dollar, both currencies serve as reserve assets for many countries. This makes euro and yen cross-currency pairs some of the most liquid outside of USD-based pairs.

Trading Euro Cross-Currency Pairs

 

Popular euro cross-currency pairs include:

•EUR/JPY (Euro/Yen)

•EUR/GBP (Euro/Pound Sterling)

•EUR/CHF (Euro/Swiss Franc)

 

These pairs often respond more strongly to news impacting the euro, pound, or franc than to USD-related pairs such as EUR/USD or USD/CHF.

 

How News Impacts Euro Crosses

•United Kingdom: Economic data from the UK significantly affects the EUR/GBP pair.

•Switzerland: Similarly, changes in Switzerland’s economic conditions impact EUR/CHF.

•United States: Surprisingly, US news also affects euro crosses by influencing pairs like GBP/USD and USD/CHF, creating a ripple effect on cross-currency rates.

 

Example

 

Imagine positive US economic data is released:

1.The US dollar strengthens.

2.GBP/USD declines, weakening the pound sterling.

3.USD/CHF rises, weakening the Swiss franc.

4.The pound’s decline pushes EUR/GBP higher as traders sell pounds and buy euros.

5.Similarly, the franc’s drop boosts EUR/CHF.

 

If the US data is negative, the reverse happens.

Trading Yen Cross-Currency Pairs

 

The yen is one of the most widely traded currencies. The EUR/JPY pair leads the yen crosses, but others like GBP/JPY, AUD/JPY, and NZD/JPY are also popular.

 

Why Are Yen Crosses So Popular?

•High interest rate differentials (carry trade opportunities).

•The yen’s role as a “safe-haven” currency during economic uncertainty.

 

Key Considerations

 

When trading yen crosses, watch the dynamics of the USD/JPY pair. Movements in this pair often reflect on other yen cross-currency pairs.

 

For example:

•If USD/JPY breaks a key resistance level, it may signal yen selling.

•As a result, EUR/JPY, GBP/JPY, and other yen crosses might rise.

Special Case: CAD/JPY

 

The CAD/JPY (Canadian Dollar/Yen) pair has gained popularity due to its strong connection to oil prices.

 

Why Oil Matters for CAD/JPY

•Canada ranks second globally in oil reserves, and rising oil prices benefit its economy and strengthen the Canadian dollar.

•Japan is entirely dependent on oil imports, making its economy sensitive to fluctuations in energy prices.

 

These factors create a strong correlation—up to 87%—between oil prices and CAD/JPY.

 

Example

•Rising oil prices strengthen the Canadian dollar, pushing CAD/JPY higher.

•Falling oil prices weaken CAD/JPY.

Why Trade Cross-Currency Pairs?

 

Cross-currency pairs offer traders opportunities beyond USD-centric strategies, allowing them to explore unique trends and diversify their positions. They are particularly useful for traders seeking more stable trends and those looking to broaden their trading horizons.

 

Ready to explore the world of cross-currency pairs and elevate your trading game? Harness this powerful tool to maximize your potential profits! 🚀