A Mild EURJPY Calendar Offers Range Trade Below Double Top

Having established a range below a recent double top, the EURJPY looks unlikely to find a catalyst for breakout with little market-moving data set to print for the remainder of this week. Data will likely play more to US dollar sentiment, as both the European and Japanese economies will be judged on their degree of decoupling from America.

[B]Trading Tip[/B] – While economic data event risk is minimal for the remainder of the week, it is important to not that EURJPY along with other “carry” pairings that feature low-yielding Yen or Swiss Franc have been very sensitive to market attitudes towards risk appetite. While our trade favors the Yen and is therefore pointing in the same direction as a flare-up in risk aversion, such events can cause knee-jerk volatility with difficult-to-predict implications. We will opt to minimize risk exposure by closing out any unfilled trades or profitable open positions before the weekly trading close on Friday.

[B]Event Risk for Europe and Japan[/B]

[B]Europe[/B] – With most European event risk out of the way for the week, the sole significant release left on the is tomorrow’s Trade Balance figure. Traders will be looking for a sign that decoupling from the US is faltering as other European data have dipped lower. On balance, price level metrics printed at elevated levels this week, making an ECB cut at the next meeting a very remote prospect.

[B]Japan[/B] – The rest of the week will prove quiet for Japan. Thursday will see the release of Industrial Production numbers for February, while Friday holds Consumer Confidence for March. The implications for monetary policy in both readings are virtually non-existent, as new BOJ Governor Shirakawa looks determined to keep rates on hold for the time being. The releases will likely matter most in terms of their implications for dollar sentiment, as the markets assess the degree of decoupling of Japan from the US recession.

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