EUR/USD Or USD/JPY: Which Pair To Play At Current Levels? - BNPP

Bank of Japan Governor Kuroda told the WSJ that inflation could be affected if the yen continued to rise excessively, leading to further easing measures to meet its price target. These are his most explicit comments since the Japanese currency started rising versus the USD this year, notes BNP Paribas.

"We remain inclined to fade pullacks in the EUR and JPY, as we expect the risk environment to remain fragile. Still, the USDJPY has already reached our target of 108 and now appears overstretched vs US 10–year yields that have been a key driver since December. Accordingly, we prefer buying EURs vs USDs at current levels rather than JPY," BNPP advises. 

In line with this view, BNPP entered a long EURUSD on Friday from 1.1290, targeting a move to new highs for the year of 1.16 with our stop set at 1.1140.