The EUR/JPY pair broke higher during the session on Tuesday, heading towards the 145 handle. Because of that, it looks as if the market is trying to break out to the upside, but I also recognize that there is quite a bit of consolidation in this general vicinity. Although the move on Tuesday was fairly impulsive, at the end of the day it would not surprise me at all to see a little bit of a pullback in order to continue to try to pick up momentum to break out above the aforementioned 145 handle, an area that I think is in fact going to be rather resistive.
Pullbacks at this time are buying opportunities as far as I can see even though I don’t like the Euro. This is a market that I believe is highly influenced by what’s going on with the Japanese yen, and essentially is a market that is ignoring what’s going on with the Euro. It doesn’t really matter, just as long as you recognize of the value of the Yen is going to continue to depreciate over the longer term.
This is a risk sensitive currency pair
Remember, this pair tends to be highly sensitive to risk appetite. One of these ways to tell which way this market “should” be heading, take a look at the overall health of the stock markets around the world. This pair tends to go higher when stock markets are doing fairly well, so as a general rule I like to look at the DAX, the Nikkei, and the S&P 500. If they all are moving to the upside, this is a pair that I often will look to for potential buying opportunities as it tends to move incongruence.
Obviously, that works in the opposite direction as well, so be aware of that. However, I am not willing to sell this market at this point in time because I see so much in the way of support below. This is especially true near the 145.50 handle, which I think is a perfect place to see buyers step back into the marketplace if we get that opportunity.