The EUR/JPY pair fell during the session on Wednesday, testing the 132.50 handle. Just as we have seen during the day and other euro related pairs, the market fell. With that being the case, I feel that this market is ready to continue going much lower. I believe that the next target is the 130 handle, and as a result I am a seller.
Looking at this chart, you can see that the yellow box above is an area that I have been paying attention to. The 135 level is the beginning of a massive resistance barrier as far as I can see, and with that I believe that there is no way to buy this market now. I also believe that the resistance goes all the way to the 138 handle, and as a result it’s going to take a significant amount of upward momentum to start buying this pair yet again.
It’s all about the Euro.
Looking at the EUR/JPY pair, it is a bit odd that this pair is falling while the rest of the Japanese yen related pairs are struggling to do so. Because of this, I think that this has more to do with the Euro than anything else. The European Union continues to struggle with deflationary headwinds, and as a result the European Central Bank will have to continue adding liquidity to the marketplace. With that, the value of the Euro continues to fall as the bond markets are no longer attractive. The Japanese yen is considered a bit of a safety currency, but at the end of the day it’s not the Euro and that’s really what matters in this particular situation. The Euro continues to be toxic, and therefore I believe that the Euro will continue to fall against most currencies, this one not been any different.
Even if we rally from here, I will simply be looking for a resistive candle in order to start selling again. However, it would not surprise me at all to break down below the 132.50 level, and heading straight to the 130 handle.