subject: Currency Jpy Role In Forex Day Trading [print this page] EUR JPY pair is major pair traded on forex market. Yet in times of little or no economic news in Europe and Japan, the EUR JPY currency pair even now attracts great number of traders.
Europe financial state both real and perceived has a giant influence on EUR pairs mainly in EUR JPY pair. Since EUR has a number of European countries in the EUR, anytime there is news both good and terrible the EUR is affected. In the case where Greece has a difficulty in obtaining loans, the EUR JPY currency pair dropped sharply. It was only while the news reported the crisis to be partly fixed did the EUR JPY pair trend stabilised.
Japan economy has been very much different to European, United States and Australian economies. Japanese economy affects the perceived price of Yen and thus affects the price of all YEN currency pair. Japanese economy appears to be lagging behind European and US economies and sometimes it is in front. Of the late it was almost impossible to find the JPY economy to be in the identical trend as EUR.
Size of Japanese market is also crucial. When US has a recession, the Japanese imports drop. This leads to Yen taking a dive on the forex markets. Still there is no apparent correlation between Japan economy and price of Yen. Fundamentals of Japan economy do not automatically transmute in price of Yen. Quite often Yen price is driven by traders expecting movement which may not be justified. This artificial sort trend can be stronger than underlying reality of the economy.
Having sound knowledge of fundamentals of countries who's economy the trader is interested in as well as short term trend yields a sound basis to make a good choice of how to trade these currency pairs.
