The bell is ringing for global risk appetite, can you hear it?
The message is simple here, but the echoes and reverberations come from outside the U.S. this time.
The EUR/JPY just printed new all-time highs.
Why does this cross matter? Without overcomplicating it, it’s a simple yet trusted datapoint we use to confirm global risk appetite.
The Euro often behaves like a proxy for global cyclicals—think big exporters and industrials. It’s really a “rest-of-world” demand story.
The Yen, meanwhile, is the classic funding leg, or safe haven currency. When investors press the gas, they sell Yen to finance risk and rotate into higher-beta assets.
Here’s a weekly chart, zoomed out about 20 years:
New all-time highs in EUR/JPY is the market’s way of saying the offense is on the field around the globe.
Here it is breaking out alongside the MSCI EAFA $EFA. This ETF holds a lot of European, British, and Japanese stocks. It’s basically the largest developed market outside of the US.
When the Euro outruns the Yen, international equities don’t just participate—they lead.
The level that matters is 170. Price broke out above that financial crisis ceiling and keeps stepping higher.
The equivalent level to EUR/JPY 170 is about 86.50 in EFA. As long as these charts stick the breakouts, the primary trend is up and risk appetite is likely broadening.
Pullbacks toward that zone are opportunities; and if and when we lose it with authority, we reassess the risk picture.
This argues for a pro-international tilt while the cross is trending. Favor the places where cyclicals live—Europe, Japan, and commodity-linked markets—so long as the Euro/Yen uptrend remains intact.
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