- The euro dropped initially during the trading session on Wednesday, struggling to maintain its strength against the Japanese yen.
- However, we have turned around to show signs of life, and the way that the market has turned around to show signs of strength suggests that the overall uptrend is likely to continue to be the way forward.
- It’s also worth noting that the ¥175.50 level is an area that has been important previously.
Technical Analysis
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The technical analysis for this market is obviously very bullish overall, as we had gapped to the upside after the Japanese election. With that being said, the market has pulled back to test the top of the gap, and now it looks like we are trying to turn things around and start to look like we are going to go to the ¥178 level. The ¥178 level is an area that offered resistance previously, so I think you have a situation where we are going to continue to see a lot of noise overall, and ultimately, I think this volatility probably has people looking at this through the prism of a “buy on the dips” market.
It’s not necessarily that like the euro itself, it’s just that the Japanese yen has so many issues with it at the moment that it makes sense that this pair will move right along with the other JPY-denominated markets. Ultimately, I do think we are higher, not only in this pair, but all of the other JPY-denominated pairs. All things being equal, I also would watch the 50 Day EMA near the ¥174 level, which is rising and offering itself as a bit of an uptrend line. Typically, this is a market that continues to see a lot of noisy behavior, but I also think all things being equal, the Japanese yen weakness will be the main driver here, although there is a bit of a positive swap in this pair if you are long.
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