- EUR/JPY pulled back early Monday but remains broadly supported, with buyers likely to step in on dips.
- The Bank of Japan’s inability to tighten keeps the yen weak, leaving the broader uptrend intact unless 175 breaks convincingly.
The Euro fell against the Japanese yen during early trading on Monday, but as you can see, we continue to see a lot of choppy behavior. And I think ultimately this is a market that will, given enough time, have to make a bigger decision. The short-term pullbacks really aren't anything significant. I think what we're looking at here is a situation where the market remains by on the dip. And I do think plenty of buyers are out there waiting to get involved. Keep in mind that the Japanese yen is backed by the Bank of Japan, which can do almost nothing to tighten monetary policy at the moment. And with this, I think you have a situation where, eventually, most currencies rise against the Japanese yen, even if we did fall from here, the 177.70 level is where the 50-day EMA currently resides and is rising. This should offer at least a little bit of support.
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If We Break Down
Anything underneath there then opens up the possibility of a move down to the 175.50 yen level. Ultimately, this is a market that I think will eventually go to the 185 yen level, but I do believe ultimately this is a market that probably goes a lot higher than that as well. This will be especially true if we get more risk appetite out there. And especially if the Japanese finally admit that they cannot tighten things.
If we break down below the 175 yen level, then it is likely that the trend may change, but I just don't see that happening at the moment. I believe that this is a story about the Japanese yen and not the euro, as we see most yen-related pairs moving in the same direction.
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