Hayes' EUR/JPY Alarm Sparks Crypto Market Concerns
Market analyst Arthur Hayes has raised an alarm for crypto traders regarding the EUR/JPY currency pair. He believes that if the pair falls to a certain level, it could signal a significant increase in dollar liquidity.
The European Central Bank's reference rate has dropped by 2.38% since September 1, from 185.63 yen per euro to 181.21 on September 3. Hayes suggests that a fall to 140 or below by June 2027 would indicate a larger increase in dollar liquidity.
The market analyst bases his argument on a four-part trade, which involves the EUR/JPY falling, French sovereign and bank funding becoming vulnerable, foreign central banks borrowing dollars at the Fed, and the Fed purchasing Treasury securities. According to Hayes, current official data shows vulnerability in France but the rest of the chain has yet to activate.