- The Euro initially did rally a bit during the course of the trading session on Tuesday, only to turn around and fall rather significantly.
- At this point in time, the Euro-yen continues to bounce around the bottom part of the overall consolidation area, and therefore, I think you need to look for signs of a bounce.
- Whether or not it comes remains to be seen, but quite frankly it certainly looks as if we are trying to do everything, we can to turn things around.
After all, the 158 yen level is an area that's been important more than once. And I do think that you have to be very cautious with trying to short this market in this area. That being said, it's difficult to get extraordinarily aggressive in this pair right now because of the fact that risk appetite is all over the place. Keep in mind that the European union released CPI numbers that were weaker than the 2% target during the session.
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Despite the Tough Session, Support Remains
So, some people have been punishing risk appetite in general, but it seems like as the Europeans go home, the Americans are picking up risk appetite as I'm watching indices such as the NASDAQ 100 suddenly look a little perkier. If that does play out, then it's very likely this market will try to recover and at least get back to the 50 day EMA, which is close to the 161.50 yen level. After that, we have the 200 EMA, which is right around the 163 yen level, and then the resistance bearer at the 164 yen level. In general, I don't like shorting this market. I do think it is a market that also has to keep in mind that the Bank of Japan recently sat still with its interest rate scenario. So, I think people continue to look for that interest rate swap at the end of every day.
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