The euro initially fell against the Japanese yen, but it wasn’t necessarily an issue with the euro itself.
EUR/JPY
The euro initially fell against the Japanese yen, and this may not have had anything to do with the euro itself. After all, we had the US dollar cross the 160 yen level, and people began to get nervous about potential intervention.
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Later in the day on CNBC, Treasury Secretary Scott Bessent suggested that the Japanese would do what they had to do to have a strong yen, and that may have caused a little bit of a wiggle as well. Again, I think that was yen buying or maybe short covering in the yen futures markets. Who knows?
But either way, it caused a little bit of a wiggle, but we've seen interest rates in both the United States and Europe rise during the trading session, so we've seen the euro actually go positive, and the US dollar mitigate most of its losses. So, it is probably more in the vein of a bit of a wiggle right now than any type of serious change.
Technical Support and Carry Trade Outlook
The 185 yen level remains supported. It has the 50-day EMA there as well, so that's worth watching. You get paid to hang on to this pair at the end of every day, which is essentially what I've been doing with yen-related pairs anyway.
And while the Japanese won't love the euro being so much stronger against the yen in a rapid fashion, their real problem is the US dollar, and that's where the problems in the financial world sit right now. After all, the Japanese own a ton of Treasuries.
Ultimately, this is a market that I think remains noisy, but it's a carry trade. I like the idea of owning it. I like the idea of buying a little bit here and there on dips. I don't get overexposed to this particular pair, but it is part of my carry trade portfolio these days.
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