The EUR/JPY pair did almost nothing on Monday, but in the big scheme of things – I think that was telling us something. After all, we simply continue to grind sideways in this market, and the support from the 120 level has held true for several days. I am more interested in what hasn’t happened more than waiting for something. In other words, we haven’t been able to continue the pullback in this market, and one of the more obvious support areas have held up.
The trend in this pair has been parabolic and positive to say the least. The move has been so strong that the buyers simply had to rest, as no market goes in one direction forever. This pair has surprised a lot of traders, and there are a lot of people that would be very interested in going long. I think that we are about to see a lot of people get involved to the long side as the market has stabilized. Certainly, this pair has the attention of a lot of the world’s traders.
The shape of the candle for the Monday session could be thought of as a hammer, but only in a somewhat abstract sense. The market shows that it is essentially happy with the current level, and it shouldn’t be overlooked that the EUR/USD pair is currently finding support at the 1.30 level. This shows that perhaps the selling of the Euro has been a bit overdone, and as a result we think that in the short-term, we may find Euro strength in general.
The ECB and BoJ
The European Central Bank has a meeting on Thursday, and could possible ease. If this is the case, I have to wonder how much farther the market would fall. After all, they have fallen apart lately as far as the Euro is concerned. On the other side of the trade, we have the Bank of Japan, which of course have been working against the value of the Yen lately, and is expected to do “unlimited easing” going forward. In that battle – Japan should win the race to the bottom.
