Currency Analyst since 2010

EUR/JPY may rise to 6-year high

Analysts at Daiwa Securities think that EUR/JPY will surge to a 6-year high in the 170.00 area by the end of the year as the European Central Bank isn’t printing money as fast as the Bank of Japan.

The chart below shows that the ratio of Japan’s monetary base to Europe’s one is jumping to the record maximum. This chart is also known as a “Soros Chart” as after billionaire investor George Soros predicted in the 1990s that the yen would weaken because of Japan’s soaring money supply and JPY really dropped 26% in the following 2 1/2 years. The chart also incorporates EUR/JPY and the declining inflation rate in the euro area.

“Europe’s monetary base continues to be significantly smaller because even as the ECB eases, it’s not buying assets like the BOJ,” underlines Daiwa Securities.

Source: Bloomberg


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