Potential signal:
- I am a buyer of this pair above the 182.50 level, with a stop loss at the 181.33 level, and a target of 184.50 above.
EUR/JPY
The euro initially pulled back against the Japanese yen during early trading on Wednesday as we continue to see the currency market fallout after the recent intervention by the Bank of Japan and US authorities. All things being equal, we are sitting just below the 200-day EMA in most yen-denominated pairs, and this is no different with the euro. The 182-yen level is an area that we are breaking above again, and the 200-day EMA sits just above there. If we can clear the 200-day EMA, it's very likely that traders will see that as a positive signal.
Top Regulated Brokers
Sure, the recent interventions have made the market a very dangerous and scary place for some traders, but fortune favors the bold and the interest rate differential continues to favor the euro. We've had multiple interventions in the past, typically geared against the US dollar, but it does have a knock-on effect on all yen-denominated pairs, and this one would probably be somewhat free to do, for the most part, whatever it wants.
Interest Rate Differentials and Technical Recovery
The European Union is starting to see stronger economics and that, of course, helps the overall attitude. I believe at this point in time, we are in the midst of trying to turn things around, and I do like the fact that you get paid at the end of every day to hold this EUR/JPY pair. That's especially true during the Wednesday session, which with a lot of brokers is actually triple rollover to make up for Saturday and Sunday.
So, that being said, it does make a certain amount of sense that yen-denominated pairs will see upward momentum on a Wednesday. But we've seen some stabilization and a significant pushback already against this intervention. As long as the pair doesn't rise too quickly, it probably can find enough value hunters out there willing to take advantage of it.
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