The Euro rallied against the Japanese yen early on Wednesday, as we celebrated the two-week ceasefire, as risk appetite returned to the markets.
EUR/JPY
The Euro rallied against the Japanese yen during the trading session on Wednesday but gave back quite a bit of the gains as we continued to see a lot of volatility. Ultimately, this is a market that I think will continue to be very bullish longer term, but in the short term we will see a couple ripples.
After all, there are a lot of headlines coming out of the Middle East with ceasefire driving risk appetite going higher, but at the same time, we continue to see a lot of issues out there whether or not peace will last.
Bank of Japan Policy
The Bank of Japan is in a situation where it cannot do anything as far as hiking rates, so I suppose it is only a matter of time before this market does breakout. You should also keep in mind that the Japanese yen has recently fought back at the 160 level against the US dollar, which is a major line in the sand.
That could be a bit of a secondary indicator for this pair because if the Japanese yen loses that and we go higher with the US dollar, it's likely that it will set off a chain reaction with the Japanese yen being absolutely scorched across the world. That is a 1990 high and that is something worth paying attention to.
The Euro of course is in a slightly different situation in the sense that we have to worry about energy in Europe or maybe we don't depend on whether or not there's a ceasefire. But regardless, you get paid to hang on to this pair at the end of every day and I think that is something that you cannot ignore.
I like buying dips. I believe that the 50-day EMA is support near the 183.50-yen level and then after that we have support at the 182-yen level. I have no interest in shorting.