EUR/JPY rose during the session on Tuesday as the Euro continues to enjoy a bit of a short covering rally, as well as a celebration of the fact that the world doesn't seem to be coming to an end at the moment. The Bank of Japan continues to work against the value of the Yen, and this of course should combine to make a fairly healthy market in this currency pair.
This is a "risk on" currency pair, so if we have poor economic appetite around the world, this of course will slowdown the ascent that this market seems to be in. However, the 100 level looks very supportive to me, and I do believe that this market will go higher. Once we got above the 100 level it looked to me like we broke out of serious resistance, and it does suggest that we will go higher. In fact I believe that this pair will see the 105 handle before too long.
There is an interest-rate differential in this pair of course that focuses most traders on trying to buy the Euro, and as a result this pair naturally wants to go higher in decent economic conditions. Certainly, if the Bank of Japan gets involved in working against the value of the Yen in the USD/JPY pair, this pair could move in sympathy. Quite frankly, if you are long of this pair, the best thing that could possibly happen to you is that the Bank of Japan intervenes against the US dollar. This will cause a spike in almost all XXX/pairs.
Buying the dips
The market looks like one that can be bought every time it dips and shows any signs of support. I truly believe that there is a massive support cluster at the 100 handle that extends all the way down to the 99 handle, and possibly even as low as 98. Certainly, this pair has found quite a bit of support over the last several months, and it certainly looks like things haven't changed yet. Because of this, I do like buying this pair, and will do so every time it dips on the shorter-term charts.
