EUR/JPY Forecast: Has Big Day Against Japanese Yen

• The EUR/JPY has rallied rather significantly during the trading session on Thursday, breaking a major downtrend line as we continue to see a lot of noisy behavior.
• Ultimately, this is very bullish; it looks like we are going to continue to see a lot of negativities when it comes to the Japanese yen. The downtrend line was obvious, and as a result, it’s obvious that the market has made a big decision.
• The market has broken above the ¥146 level, which of course is a very bullish sign in and of itself.

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The size of the candlestick is also something worth paying attention to, as it shows that there is real conviction in this market. The Japanese yen has been hammered against most currencies, as we have seen a lot of concern about interest rates around the world as the Bank of Japan has been fighting interest rates rising in the country. At this point, the market is likely to continue to see the Japanese yen weaken against most currencies, and the fact that the Euro also had the added boost of the European Central Bank raising rates by 50% during the day only makes this turbocharged.

See Pullbacks as Buying Opportunities

At this point, it’s very likely that we could go to the ¥148 level, which is the previous high. That’s an area where I would expect to see a significant amount of resistance, but if we break above there then it’s possible that the market could go as high as the ¥150 level. Short-term pullbacks at this point could be a nice buying opportunity, with the previous uptrend line being a major support level. If we were to break down below there, we would also take on the 50-Day EMA, so I would anticipate that there is a significant floor in that region.

Breaking down below that level would be rather negative, but I don’t think that’s going to happen very quickly. This will be especially true if interest rates continue to turn around the way they have, with Jerome Powell suggesting that the Federal Reserve was going to continue to be very resistive. It’s likely that the bond market will continue to drive the rest of the bond market world higher as well, as rates will continue to ratchet up to fight inflation, not only in the United States but in places like Europe, the United Kingdom, etc.

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