The euro rose against the Japanese yen on Monday, but then fell a bit later, as risk appetite has seemingly found trouble in the US session. That being said, you still get paid a positive swap to hold here.
EUR/JPY
The euro initially rallied against the Japanese yen during early trading on Monday but has turned around to show signs of hesitation as we have seen a decided turnaround in risk appetite in general. All things being equal, this is a market that remains very choppy and noisy, and it is worth noting that we are at the top of an overall consolidation range that we have been in, with the 186.50-yen level being a bit of a barrier.
If we were to break above there, then we could go looking at the 187.50-yen level where we had fallen apart from back in late April. Underneath, we have the 50-day EMA offering support sitting just above the 185-yen level.
Pullbacks Offer Buying Opportunities
And with the interest rate differential continuing to favor the euro, I think you’ve got a situation where short-term pullbacks continue to offer buying opportunities. The candlestick is a bit bearish looking, so perhaps we get an opportunity to see a little bit of value that we can take advantage of. This is a market that hasn’t changed at this point in time.
Ultimately, I have no interest in shorting this market, and I continue to hold currencies against the yen so I can get paid at the end of every session. Ultimately, I do think that we go higher, but I also recognize that it’s not a straight shot up in the air, as there are so many concerns around the world right now when it comes to risk appetite and markets in general. This is a pair that will rise and fall with the overall risk appetite.
Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions
As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire
