- In my daily analysis of minor currency pairs, the EUR/JPY pair saw a strong rally during Monday's trading session, kicking off the week with momentum. The ¥164 level will likely draw attention as it has been a key area of significance multiple times.
- Because of this, I think a certain amount of “market memory” will come into the picture, offering a bit of a barrier for traders to pay close attention to.
The Japanese Yen
Keep an eye on the Japanese yen overall, because it does tend to move in the same direction.
This makes a lot of sense right now, due to the fact that the Bank of Japan has recently announced that they are not willing to tighten monetary policy any further, because quite frankly the massive amount of debt that the Japanese are in prevents that from being a feasible path forward.
In other words, we will continue to see the carry trade play out, as the market favors the higher interest rates, and hanging on to the currency in order to get paid at the end of every day.
Even if we do pull back from here, the 200 Day EMA offer support, and then again, we have the 50 Day EMA near the ¥162 level, which would be an area that a lot of people will be paying attention to base upon the recent reaction that we have seen in this market, as a grind sideways to work off some of the excess upward momentum that we have had.
Top Regulated Brokers
If we do break above the ¥164 level, then the market more likely than not will go looking to the ¥162 level, an area that has been important multiple times.
If we were to break above there, the market could go looking to the ¥170 level. All things being equal, this is a market that I think continues to see a lot of volatility, but I still favor getting paid at the end of every day, so I think you will be looking for some type of value.
Ready to trade our daily Forex forecast? Here’s a list of some of the best regulated forex brokers to check out.