Currency Analyst since 2010

Investors are moving out of EUR

By Mark Jensen

The negative deposit rates adopted by the European Central Bank and low yields on the peripheral debt make the euro area less attractive for investors and, consequently, drag euro down. The single currency weakened versus the US dollar, British pound and Japanese yen.

USD and GBP gain against EUR as 10-year yields for the US and the UK debt have climbed in the recent sessions, while yields for the equivalent German bonds haven't gained as much. The difference in bond yields reflects divergence in the monetary policy of the Fed and the Bank of England on the one side and the ECB on the other side.

As for EUR/JPY, we have the Bank of Japan’s meeting on June 12-13. According to the consensus forecast, the BOJ will keep interest rate unchanged. Analysts at Mizuho think that the BOJ Governor Kuroda won’t dramatically change his bullish stance on the economy and that may stand out as a contrast to the ECB’s outlook.


Chart. Daily EUR/JPY


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