EUR/JPY has bounced back into the middle of its long-term 128-134 range. Economists at ING expect the pair to turn back higher by year-nd and reach the 140 level in 2023.

The equity market hedge

“EUR/JPY only seems to hit the headlines when equities start to sell off sharply and the JPY briefly outperforms. What of equity markets? Yes, higher US bond yields may favour value over growth stocks, but we favour 2022 being another year of (more modest) equity gains.”

“EUR/JPY could have a slight wobble around European politics in Italy (late January) or France (late April).”

“By year-end, EUR/JPY should be back on the up as the ECB prepares for a March-23 rate hike. EUR/JPY can hit 140 in 2023.”