- The euro initially found during trading on Thursday, but then turned around to show signs of strength again as we continue to threaten the ¥165 level.
- There is a significant amount of noise just above, and if we can break out to a fresh, new high, then it’s likely that the euro will continue to go much higher.
- All things being equal, the market is likely to continue to see a lot of value hunting, at least every time we pull back.
Bank of Japan
Keep in mind that the Bank of Japan is likely to continue to see a lot of reasons to keep the monetary policy rather loose, and despite the fact that the European Central Bank is likely to cut rates in the future doesn’t seem to be deterring traders from hanging onto this pair, because you get paid at the end of every day. The Japanese have far too much in the way of debt to try to cut rates anytime soon, therefore I think you get a situation where the Japanese yen continues to get eviscerated against almost anything and everything.
Underneath, the 50-Day EMA is sitting near the ¥163 level, and that is probably the short-term floor in the market. It’s probably worth noting that the candlestick for the day looks a bit like a hammer, and therefore it looks like we are going to continue to try to squeeze higher. That being said, I think it all comes down to the USD/JPY pair, which if it breaks above the crucial ¥155 level, we will probably see you all again related pairs continue to go much higher.
In the meantime, any type of short-term pullback is more likely than not going to end up being a buying opportunity, and I think most traders continue to see that as the case. It’s also worth noting that the market is going to continue to see plenty of resiliency, as long as the Japanese are in the same situation they happen to be in right now. In fact, things can get quite ugly for the Japanese yen and if we do pull back, I’m more than willing to buy this pair yet again.
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