The Euro has risen against the Japanese Yen during the trading session here on Wednesday as the interest rate differential continues to be a main driver of things. The ECB meets on Thursday, so be aware that volatility is almost certain to happen.
EURJPY
The Euro has risen against the Japanese Yen during the trading session here on Wednesday as we continue to just see a nice uptrend in a market that quite frankly has been a buy on the dip opportunity every time it falls. We are sitting above the 50-day EMA and of course the uptrend line.
We are hanging around the 185 Yen level and that of course is a large round psychologically significant figure that attracts a lot of attention. If we do pull back from here, I think that opens up the possibility of buyers getting involved on value.
Interest Rate Differentials and Policy Outlook
Keep in mind one problem we have is that the Thursday session has the ECB interest rate decision and that will come into the picture and cause a little bit of noise from everything I can see. With this being the case though, I think unless the ECB sounds suddenly very dovish, which I don't think they will, you have a scenario where the interest rate differential will continue to favor the upside as the Bank of Japan really can't do anything.
I suspect at this point we will eventually go looking toward the 190 Yen level, but that might take some time to get to. If we were to break down below the uptrend line and ostensibly the 50-day EMA, then I look for support at the 182 Yen level, possibly even down to the 180 Yen level. I have no interest in shorting this pair. I do not pay the swap and of course the trend is very well established here.
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