- The EUR/JPY has had a very strong session against the Japanese yen during trading on Monday, as it appears risk appetite is coming back into the market.
- This is a bit of gambling because people are trying to get ahead of several major announcements this week.
- That being said, I think the market is more likely than not going to be very noisy, but I do think that it is probably only a matter of time before we have to make a bigger decision.
Keep in mind that the Bank of Japan has to continue to work against rising interest rates overall, meaning that they are buying unlimited bonds. What this means is they are printing Japanese yen, therefore flooding the market with that very same currency. I do believe that we have a situation where it’s probably only a matter of time before that catches up with them yet again. It’s also worth noting that we are above the 50-Day EMA again, and now it looks like this trendline being broken is yet another sign that the Euro is likely to go much higher against the Japanese yen. By the end of the day, we had recaptured the ¥145 level.
Japanese Yen to Face a lot of Pressure
I do believe that given enough time, we will probably go back to the ¥148 level, because of the Japanese yen weakness, and the possibility that the ECB raises rates yet again this week. That obviously would be good for the currency, and therefore it should be reflected in this currency pair. Also keep in mind that the Federal Reserve is going to be raising interest rates on Wednesday, which of course also adds a lot of pressure on the Japanese yen in general.
This is because the Bank of Japan will continue to have to fight rising rates in general, as the rest of the world moves forward. In that environment, there’s almost no way to get away with not printing more yen. I do believe that this is the beginning of a bigger mood, but to recognize that Thursday has that ECB meeting, and therefore probably has a lot of noise around it. Pullbacks at this point in time should be a nice buying opportunity, and I do think that we will recapture those highs and eventually go looking to the ¥150 level.
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