Home ForexArticles Credit Agricole Says EUR/JPY Is Overvalued By Investing.com

Credit Agricole Says EUR/JPY Is Overvalued By Investing.com

by SuperiorInvest

Credit Agricole's (OTC:) FAST FX model indicated that the currency pair appears overvalued, prompting the bank to recommend a sell trade. The model estimated that the short-term fair value of EUR/JPY has decreased from an all-time high of 163.9110 to 162.1633.

This change was attributed to a rise in peripheral European government bond (EGB) yields relative to German Bund yields, coupled with an underperformance of European equities against their Japanese counterparts and a decline in the term ratio. exchange between the eurozone and Japan.

According to Credit Agricole, the current valuation of the EUR/JPY pair exceeds the threshold of being more than two standard deviations above its estimated fair value. As a result, the bank began a sale operation of the currency pair. They have set a stop loss level at -2.74% and a profit-taking target at the recalculated fair value of 162.1633.

The bank's FAST FX model is scheduled to automatically close the trade at 22:00 BST on Friday 17 May. The trade will end at this time unless the EUR/JPY pair reaches the take profit or stop loss levels set by the bank before the specified date.

This move by Credit Agricole reflects a response to recent market events that have influenced the valuation of the EUR/JPY currency pair. The bank's analysis suggests that the pair is currently trading above what its model considers a sustainable level, based on short-term fair value estimates.

This article was generated with the support of AI and reviewed by an editor. For more information consult our T&C.

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