The Euro has been very choppy against the Japanese yen on Thursday, continuing the overall sideways action that we have seen for weeks. The interest rate differential continues to be an issue that moves the market as well.
EUR/JPY
The Euro has been very quiet against the Japanese Yen during trading here on Thursday as we are reaching the top of the overall consolidation area that we've been in for basically 6 weeks. That being said, we now have a situation where traders are trying to sort out whether or not we can finally break above the 186.50 Yen level. If we can break above there, then I think that is a very good sign, and it could have this market streaming towards the 188 Yen level given enough time.
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Technical Breakout Potentials and Yen Weakness
Short-term pullbacks, I think, continue to look at the 50-day EMA and the 185 Yen level. Both offer quite a bit of support. Ultimately, this is a market that I don't have any interest in shorting because, quite frankly, the interest rate differential favors the Euro over the Japanese Yen. And of course, the Japanese Yen simply cannot seem to get a break in general. This seems to be a situation that the Bank of Japan cannot ignore.
While we are at the top of a range and I fully recognize that it is possible traders will look at this as a potential barrier, if we do break out, then I think we get a bigger move again to the 188 Yen level, possibly the 190 Yen level. I like the idea of buying short-term dips, and I recognize that the Japanese Yen in general is in trouble against multiple currencies, not just this one. So, I think this is more of an indictment of the Yen itself.
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