EUR/JPY up 80 pips to the highest since Sept 2018

The big FX breakout today is in EUR/JPY, which has cruised above the April 20 peak to the best levels since September 2018.

Technically, this ends the period of consolidation that's been ongoing since February and will mark a fresh push for the late-2018 high of 133.13 if not the January 2018 high of 137.50.

On the fundamental side, I look at this as a test of which region can break out of the disinflationary mode first. The inclination is to bet on Europe, if only because the history of low inflation is a shorter one. I'm not sure that will ultimately be the right move because the eurozone is fiscally-constrained in a way that Japan isn't, but for now, the trend is your friend.

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