When you decide to trade on the foreign exchange market it is imperative that you understand the factors that make one currency more attractive than another in a pair.
Among the major factors there are of course the interest rates of these currencies so it is necessary to know how to create an analysis to be able to determine if the rate of the currency pair will rise or fall.
This is equally the case for the EUR/JPY.
The entities responsible for determining the interest rates of currencies are of course the large central banks of each country or group of countries. Concerning the Euro it is the ECB, or European Central Bank, that is responsible. For the Yen it is the Bank of Japan that determines the rate.
The interest rates of these two currencies change regularly of course and information is published in the economic calendar regarding each movement.
The influence of interest rates on currencies such as the Euro or the Yen is as strong and large as the different rates relating to a currency pair. Therefore, a currency with a weak interest rate will be less expensive to buy and a currency with a strong interest rate will be more advantageous for resale.
It is therefore possible to implement an effective trading strategy using an analysis of these rates and by anticipating their movements to take or close positions.