Yen bulls are shifting their focus to the euro as speculation that the Federal Reserve will increase interest rates as early as next month buoys the dollar.
Deutsche Bank AG, Nomura Holdings Inc. and Societe Generale SA all recommended buying the yen against the euro in notes to clients toward the end of last week, as the Japanese currency hovered near a three-year high. Euro bear Deutsche Bank says the Bank of Japan is losing its power to lift inflation expectations. Selling the euro against the yen will take advantage of both a stronger Japanese currency and dollar in the near term, according to Societe Generale. Nomura also points to the differences in real yields and current-account surpluses.