HOW TO TRADE FOREX: EURO/JAPANESE YEN (EURJPY)
The EUR/JPY pair, crossing two of the world's strongest and most widely traded currencies—the Euro and the Japanese Yen—is a favourite among traders looking to diversify their strategies beyond the major pairs. This pair offers an intriguing look into the interaction between the Eurozone and Japan, two economic powerhouses with significantly different monetary policies. Successfully trading the EUR/JPY requires a detailed analysis of European and Japanese economic factors, including interest rates, economic growth, and the policies of the European Central Bank and the Bank of Japan.
Furthermore, the EUR/JPY is characterized by its potentially volatile price movements, which changes can influence in global risk appetite and fluctuations in the stock markets. This makes it crucial for traders to stay updated with global events and economic trends that could affect both the Euro and the Yen. With a solid strategy and a deep understanding of the markets, trading the EUR/JPY can offer exciting and profitable opportunities in the Forex market.
Top 10 Factors Affecting the Euro-Yen Pair
Monetary Policy of the European Central Bank (ECB) and the Bank of Japan (BoJ): The decisions on interest rates, economic stimulus measures, and expansive or contractive monetary policies of these central banks directly impact the EUR/JPY pair.
Interest Rate Differentials: The difference between interest rates in the Eurozone and Japan can influence investment flows. Higher rates in one region can attract investors looking for better returns, strengthening that currency against the other.
Economic Performance and Growth: Key economic indicators such as GDP, inflation, and employment figures in the Eurozone and Japan can alter the perception of relative economic strength and, thereby, influence the EUR/JPY.
Global Risk Aversion: The Japanese Yen is considered a safe-haven currency in times of economic uncertainty or market turbulence. During these periods, the JPY can be appreciated against the Euro.
International Trade Policies and Foreign Relations: Trade tensions, agreements, and foreign trade policies, especially between the EU, Japan, and their major trading partners, can affect the dynamics of this pair.
Capital and Investment Flows: Capital movements to and from the Eurozone and Japan, whether through direct investments in stocks, bonds, or real estate, can influence the demand for EUR and JPY.
Market Sentiment and Speculation: The perception of traders and speculative operations based on technical analysis or market expectations can cause fluctuations in the EUR/JPY.
Political Stability: Political stability and elections in the Eurozone and Japan can impact investor confidence and the relative strength of each currency.
Bank of Japan Interventions: The BoJ has previously intervened to weaken the Yen and could do so again if it considers a too-strong Yen harmful to the Japanese economy, affecting the EUR/JPY.
Global Events and Financial Crises: Financial crises and other globally impactful events can significantly alter risk appetite and the search for safe-haven currencies, directly impacting the EUR/JPY pair.
Related Assets Influencing the Dynamics of the EUR/JPY Pair
Nikkei 225 Index: Reflects the economic health of Japan. An increase in the Nikkei generally indicates optimism about the Japanese economy, which can strengthen the JPY against the EUR.
DAX Index: Similar to the EUR/GBP, the DAX provides a view of the Eurozone's economy. A rising DAX may signal economic strength in the Eurozone, benefiting the EUR against the JPY.
Japanese Government Bonds (JGB): The yields of JGBs indicate risk perception and monetary policy in Japan. Higher yields can attract investment towards the JPY, strengthening it against the EUR.
Eurozone Bond Yields: Changes in the yields of sovereign bonds from major Eurozone countries (such as Germany and France) can affect the EUR. An increase in these yields may indicate a perception of higher risk or inflation expectations, potentially strengthening the EUR against the JPY.
Top FX Trading Apps
Opening a FX Trading Account
Select a Reliable Broker: Research and choose a broker that meets your expectations regarding trading tools. The security of your funds should be your priority.
Registration: Go to the broker's website and find the option to register a new account. You will need to provide basic personal information, such as name, email address, phone number, and, in some cases, an ID document to verify your identity.
Account Verification: Brokers require a verification process to comply with anti-money laundering regulations. This usually involves uploading documents such as a photo ID and proof of address.
Initial Deposit: You can make your first deposit once your account is verified. Brokers offer different payment methods, including bank transfers, credit/debit cards, electronic payment systems, and even cryptocurrencies. Returning to point 1, if you have specific needs like "I can only use brokers that accept payment method XYZ, " choose the broker that fits your needs.
Trading Platform: With your account funded, you can now access the broker's platform. If you haven't already, now is the time to familiarise yourself with the platform. Take advantage of the demo account if it's available. It allows you to practice your trading strategies, an advantage not only for beginners but also for experienced traders who are testing new strategies or simply seeing the execution and advanced features the trading app offers.
Set Up Your Trading Space: Customize the platform according to your preferences. This includes selecting the financial instruments you plan to trade, setting up charts, and implementing any technical indicators you regularly use.
Trading Strategy: If you haven't already, define your trading strategy, including risk management. Setting loss limits and profit targets can help you keep your trading disciplined and focused on your long-term goals.
First Trades: With everything in place, you can start trading.
BlackBull Markets, founded in 2014 by Michael Walker and Selwyn Loekman in Auckland, New Zealand, has emerged as a trusted and regulated ECN broker offering access to diverse tradable instruments. BlackBull Markets stands out with its three distinct types of ECN accounts, catering to traders' varying needs and preferences: Standard Account, Prime Account, and Institutional Account.
The Standard Account is an excellent choice for traders seeking a cost-effective forex experience. It offers a convenient entry point without minimum deposit requirements and commission-free trading. Traders can access all tradeable instruments and utilize user-friendly trading platforms, including PC, Mac, mobile, and Webtrader.
The Prime Account provides a competitive edge for those looking to maximize their trading potential. With spreads as low as 0.1 pips and a commission of $6 per lot for most currency pairs, traders can benefit from tighter spreads and lower costs. The Prime Account requires a minimum initial deposit of 2000 USD and offers leverage of up to 1:500, along with micro lots for precise position sizing.
BlackBull Markets also caters to larger traders with its Institutional Account, providing a truly institutional trading experience. With a minimum initial deposit of 20,000 USD, traders can access customisable commission structures, 24/7 dedicated technical support, and a customised MAM/PAMM platform. Qualifying traders can benefit from free VPS access based on trading volume.
Regulation is key to BlackBull Markets' offering, ensuring a secure and transparent trading environment. Prominent authorities regulate the broker, including the Financial Services Commission of New Zealand (FSPR).
With a commitment to exceptional financial services and a focus on client satisfaction, BlackBull Markets has garnered a strong reputation within the industry. Their comprehensive range of over 26,000 tradable instruments, competitive trading conditions, and reliable customer support positions them as a top choice for traders seeking a trusted ECN broker.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.
