All Yen pairs are on the verge of big breaks below, all pairs are oversold as prices sit on major supports below. The most important JPY pair is EUR/JPY because its a market leader as most widely traded. Since 2001, EUR/JPY earned the market leader distinction and it holds today. If EUR/JPY breaks below, all JPY pairs break below. The reason EUR/JPY hasn’t broke is due to the huge significance to the break.
EUR/JPY is unsure where it stands, its a market indecision at work. EUR/JPY Correlation with USD/JPY runs 0.53 or 53% and 0.23 or 23% Vs EUR/USD. A 25% variation exists in an unexplained price and that’s just factored to a simple correlation. The variation is actually far wider than 25% to look deeply into further Statistics. Every price movement in EUR/JPY has no significance. Its floating and wandering, its price is meaningless.
The price break below at 132 would set the stage for the next period into how currency prices will trade but more important is how will pairs align Vs each other. Its called a Realignment and a rare rare occurrence in currency trading. We’ve been on the verge of realignment for many many months but it hasn’t happened yet. Not until EUR/JPY breaks will we know yet if EUR/JPY breaks below today at 131 then it weakens its correlation to EUR/USD which means formal risk off markets will define the new period. Weaken means at current prices, EUR/USD still shares a 0.02 correlation which is still positive. At 130 EUR/JPY and current EUR/USD and USD/JPY prices, the Correlation turns formally negative vs EUR/USD. That should mean EUR/USD will have ability to go lower, USD/JPY higher.
NZD/JPY. 75.04, 73.89
CHF/JPY. 125.27, 127.77
CAD/JPY 88.64, 89.79, 92.58 above.
EUR/JPY. 132.52, 131.32 Vs 134.96, 136.35
Brian Twomey, Inside the Currency Market, btwomey.com