- The Euro looks like it's building a base against the yen.
- As you can see, we have pulled back just a bit during the trading session here on Friday, but it's been pretty quiet.
- The Americans were away for Good Friday. It makes a certain amount of sense that we slow down.
But this pullback is something that I think people are looking at as a potential buying opportunity. The ¥163 level is an area that I think will continue to be an area of interest. It was a previous swing high, and now it's probably only a matter of time before the buyers come back in and pick this pair back up. That’s been the pattern for some time, and therefore it makes a lot of sense that we simply continue the momentum longer-term.
Differential in Interest Rates
After all, the interest rate differential does favor the euro. The Bank of Japan raising interest rates to a paltry 0.1% isn't going to do much to change the yen's fortunes. So, with this, I'm a buyer of this dip. I do think we go much higher, but I also recognize that it may be more of a grind.
But either way, this is a market that I think eventually goes. Looking to get back to the ¥165 level and once it breaks above there, then it could really start to take off again. The Japanese have far too much in the way of debt to do anything along the lines of tightening. Seriously. So really, at this point in time, it's a one way trade.
It just comes down to how patient you are. Remember, you get paid at the end of every day to hold this EUR/JPY pair and that. Of course, is a main contributing factor to where we are going. With that being said, I buy dips. I continue to hold most yen denominated pairs as an investment.
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