Economists at ING note that EUR/JPY is positively correlated with growth cycle. Therefore, they expect the pair to move downward over the coming months.

The cycle is not looking good

“EUR/JPY typically tends to be positively correlated with the global growth cycle – and clearly the cycle is not looking good.”

“Fiscal efforts by governments to offset the energy crisis at both the consumer and business level will struggle to prevent economies entering recession. The recent hawkish turn from the ECB has yet to provide any lasting support to the euro.”

“Our EZ macro team looks for just a 75 bps ECB tightening cycle this year – compared to 166 bps of tightening expected by the market. If correct, that should leave the euro vulnerable this autumn.”