- The Euro pulled back a bit during the trading session on Monday against the Japanese yen, as we continue to see a lot of noisy overall trading behavior.
EUR/JPY
Nonetheless, the longer-term trend is most certainly to the upside, and I think that continues to be the major driver of where we go next. If we were to drop from here, the 182 yen level is an area that I think will more likely than not offer quite a bit of support, especially as the 50-day EMA is racing toward it. Remember, the interest rate differential still favors the Euro over the Japanese yen.
Because of this, I think traders will continue to try to hold this pair over the longer term, and getting paid at the end of every day certainly helps. If we were to break down below the 182 yen level, then I will be watching the 50-day EMA, presently at the 180.47 level and rising for support.
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Upside Targets
To the upside, I see the 186 yen level as a potential target. The 185 yen level underneath there, of course, has a certain amount of psychology attached to it, but I think given enough time, we will slice through it. In fact, we almost did about a week ago, and I think you have a situation where we will continue to see buyers willing to take advantage of dips.
The Bank of Japan has recently raised rates, but quite frankly, the market didn't seem too impressed by it, and as a result, I think the Japanese yen will continue to get punished for a whole host of reasons. I have no interest in shorting this pair but do keep in mind that if we get some type of major systemic fear out there, it does tend to benefit the Japanese yen. That correction would probably be a nice opportunity to get long again at an even better price.
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