Overall, I think this is a situation where we continue to have some troubles, but ultimately it looks like we are going to go higher in general.
- The EUR/JPY currency pair has rallied slightly during the trading session on Friday, as we continue to see the Japanese yen get hit.
- Breaking above the ¥143.50 level could open up a move to the ¥145 level, but at this point in time it’s likely that we are going to see a lot of noisy behavior in general.
- Ultimately, keep in mind that the Bank of Japan continues to fight interest rates rising in that country, therefore it’s likely that the Bank of Japan will continue to print yen. If that’s going to be the case, then it’s likely that we have the euro and other currencies to run to, as the yen loses strength.
EUR/JPY Technical Outlook
Look at this chart, if we do break out to the upside, the ¥147.50 level is essentially a ceiling in this market, so I think it’s going to be very difficult to get above. If we did, that it’s likely that we go much higher, sending this market into a bit of overdrive. I think at this juncture, we could see quite a bit of noise, as the market continues to guess what traders around the world are going to do, and of course what central banks are going to do. Quite frankly, the narrative is getting ridiculous, and the volatility is only going to get worse. The most recent move has been very bullish, so one would assume that there should be more momentum. Pullbacks at this point in time should see the 50-Day EMA as a potential support level near the ¥142 level, which I think the market will be paying close attention to. After that, the 200-Day EMA sits right around the ¥140 level, and I think that is your “floor in the market.”
Ultimately, this will come down to the Bank of Japan more than anything else. That being said, I think you will continue to see the Japanese yen behave the same against most currencies, and it certainly looks as if it is breaking out of a basing pattern, but that doesn’t necessarily mean that is going to be an easy move. Overall, I think this is a situation where we continue to have some troubles, but ultimately it looks like we are going to go higher in general. This market continues to be choppy, so keep your position size reasonable.
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