The EUR/JPY pair rose during the session on Tuesday, finally breaking above the 133.50 resistance level. The move above that level has me thinking that this pair is going to eventually find the 135 handle, and as a result I have started buying again. On top of that, the 133.50 level should offer buying opportunities as well, as it should be very supportive on pullbacks. In fact, I believe that short-term traders will continue to push his market higher every short-term pullback we get, so therefore I am very bullish in general. Because of this, I obviously will not be selling this pair anytime soon.
I do believe that the 133 level is the "floor" in this market right now, and as a result any pullback all the way down to there is a potential buying opportunity. It will only take short-term supportive candles in order for me to go long, as I do believe that the "risk on" appetite of global markets in general should continue to propel this market higher.
Bank of Japan
Remember that although the European Central Bank had a surprise rate cut last week, the Bank of Japan continues to work feverishly against the value of the Yen. Through bond buyback programs, it has driven down the yields in Japan to historically low rates, and as a result there is very little demand for the Yen. This should continue to hamper the Yen against most currencies, even the Euro which has recently been beaten up because of that surprise rate cut.
Again, the interest rate differential is high enough that traders will go long when there is decent risk appetite out there. If we can get above the 135 handle, I fully believe that this market will eventually approach the 140 handle, but it might take some time. Expect pullbacks offer buying opportunities going forward, especially if we get above the 135 handle between now and then. For selling is concerned again, it's going to be almost impossible to do unless we get below the 131 handle, and quite frankly I think that support probably extends all the way down to the big figure number the 130 handle.
