Potential signal:
- I am buying on a break above the 186.50 level, with a target of at least 188, and a stop of 185.75.
- The Euro has risen against the Japanese yen during trading on Tuesday, as we continue to see a lot of interest rate differential coming into the market psyche.
EUR/JPY
The Euro has jumped higher against the Japanese yen during trading on Tuesday as the yen itself continues to take a bit of a beating. Ultimately, this is a market that will remain, I believe, positive, but we need to pay close attention to the 186.50 yen level. This is an area that's been resistance recently, and if we were to break above there, it could lead to buying again, perhaps towards the 188 yen level—an area that kicked off some intervention by the Bank of Japan, although I don't think it was necessarily queued by this pair, but that's where we happen to be in the Euro against the yen at that point.
Top Regulated Brokers
Ultimately, this is a market that I think continues to see a lot of questions asked about momentum, but it is worth noting that the US dollar has broken to fresh highs against the yen, so I'm assuming that at this point in time, we will get a little bit of follow-through here. If we do, then it opens up the possibility of that move, perhaps even higher than that.
Key Technical Levels and Carry Trade Dynamics
Short-term pullbacks, I believe, continue to see support near the 50-day EMA, which is also near the 185 yen level, an area that's been important. And then, after that, we have even more support at the 184 yen level.
And I believe ultimately this is a market that will continue to find plenty of reasons to have people pay attention to it and start buying, not the least of which, of course, would be the interest rate differential that is going to remain fairly stable. Both central banks are probably stuck essentially where they're at now, and with that being the case, I think it leaves a little bit of stability and a little bit of reliability for carry traders to get involved.
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