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Price analysis: EUR/JPY recovered after a drop, but downside risk remains

The Japanese yen and euro currency pairing reclaimed over the lower trendline of a going down channel drawn out since August last year.

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Forex currency trading stands out as the trade that never goes off in the working week, features the far-reaching volume of the global business, and has investors from all parts of the world. However, the most popular indices are set lower in the premarket stocks.

But still, the Japanese yen and euro currency pairing ticks out as the most popular marketed currency crosses.

Both coins appear under the top eight ranked liquidity currencies, explaining why they earn the “major” designation. Technically, none of the two currencies, JPY and EUR,  ranks as commodity-related currency.

While the two countries depend on raw imports like crude oil, robust industry diversity is the thing that enhances conventional valuations.

The European Central Bank and Bank of Japan monetary policy decisions are the primary elements behind the growing Japanese yen and euro exchange rate.

The valuation model contrasts with that of the cryptocurrencies or commodity dollars (CAD and more).

EUR/JPY Recovery

On March 9th, 2022, the Japanese yen and euro currency pairing rallied approximately 240-pips. And the pair matched its seven-day losses amidst a risk-on trade state of mind stimulated by the Russian-Ukraine war developments. Today, March 22nd, 2022, the EUR/JPY currency pair trades at 132.19.

Geopolitical news continues occupying the traders’ minds of late.

For instance, on March 9th, 2022, a risk-on market state of mind was brought about two news headlines, highlighting that Ukraine had dropped out from joining the North Atlantic Treaty Organization, alongside Ukraine’s Deputy Chief of Staff’s statement mentioning that Ukraine was prepared for a quick consular fix without trading even a minute-inch of their dominion.

Following this statement, the euro currency rallied versus several G8 currencies. This shift was experienced because the investors assessed the possibility of a Russia-Ukraine cease-fire.

However, the Russian position stayed what it had initially requested, so the rally seemed to be connected with the upcoming ECB monetary policy meet-up.

Investors expect this meeting to confirm the PEPP end by the tail end of March this year. The market participants also expect the APP to go beyond as required.

They expect messaging to enhance flexibility, even if the Ukraine-Russia conflict woes and their head-on effects for the European section could activate a warlike note by Christine Lagarde (ECB’s President). As noted earlier, the Japanese yen and euro currency pairing rallied approximately 240-pips on March 9th.

But what are pips? Keep going through this in-depth post to find the correct answer and its role in the trading world.

What Are Pips

Pips refer to measurement units for currency fluctuation, and it appears as the 4th decimal place in several currency pairs.

For instance, if the EUR/JPY changes from 1.1021 to 1.1022, that marks a single pip change. Several brokers give fractional pip valuation, meaning you’ll also come across a 5th decimal place like 1.10223, where 3 is equal to five pipettes or 5/10 of a single pip.

The loss/profit produced by a pip movement relies on the currency you financed your investing account with and the currency set you’re trading.

Pip’s pricing situation matters since it influences risk. Prepare yourself to find it challenging to determine the ideal trade size/position if you have zero knowledge about the pip value.

Also, with zero pip value knowledge, you’re likely to risk too little or too much on investment.

Conclusion

The Japanese yen and euro currency pairing reclaimed over the lower trendline of a going down channel drawn out since August last year.

However, it encountered robust opposition on Jan 25th daily high reading of 128.25. It’s pivotal to note that the fifty-day moving average will almost spin under the hundred-DMA, whereby the day moving averages would position themselves in a superbly bearish sequence, further fastening the descending bias.

Today, EUR/JPY currency pairing trades at 132.19. However, to stabilize above this mark, a broader risk appetite recovery will be required (with the US equities taking back a decent section of lately lost ground), and forex market concentration will need to adapt to the central bank policy divergence.

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