Potential Signal:
I am a buyer of this pair right now. I would have a stop loss at ¥164, and I am aiming for the ¥167 level.
- The euro rallied significantly during the trading session on Tuesday, to break above the ¥165 level.
- It now looks as if the euro is going to continue to rally rather significantly against the Japanese yen, which makes quite a bit of sense considering that the Bank of Japan continues to keep in almost zero interest rate policy.
At this point in time, I like the idea of buying short-term pullbacks in order to take advantage of the ¥165 level as a potential support level. Underneath there, we have the ¥163 level, which also features the 50-Day EMA. Quite frankly, I don’t know that this has a lot to do with the euro but may have a lot more to do with the Japanese yen. With that being the case, it’s very likely that we would see not only the EUR/JPY pair rally, but we will probably see the USD/JPY pair rally, right along with other one such as NZD/JPY, CAD/JPY, GBP/JPY, and so on.
Bank of Japan
The Bank of Japan has recently blathered that they may possibly raise interest rates, but at this point in time they can only do it at 0.10% increments, and therefore it doesn’t really matter. It’s more or less just a prayer without any faith behind it to change the situation. Quite frankly, the Bank of Japan did cause some type of significant pullback, I am more than willing to step in and start buying more euros against the Japanese yen, just as I would do the same thing with New Zealand dollars, Canadian dollars, and so on.
As far as a target is concerned, I think it’s probably only a matter of time before the currency pair moves toward the ¥167 level, perhaps even as high as the ¥170 level above there. In general, this is a market that will continue to be very noisy, but we are clearly in an uptrend, and that has not changed at all to say the least. Regardless, I have no interest in shorting this pair, just as I feel the same against anything else that’s denominated in Japanese yen.
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