EUR/JPY Forecast: Breaking Higher
The Euro broke higher during the course of the trading session on Tuesday, as we are now above the 170 Yen level. The 170 Yen level is a large round, psychologically significant figure that a lot of people aren't going to pay close attention to. And if we pullback at this point in time, I think the 169.40 yen level would be an area that could be a support due to the fact that we had previously seen resistance here. So, a certain amount of market memory could come into the picture. A pullback to that area then I think offers enough value that people will continue to see this as a potential value play.
Ultimately, the market participants continue to play the interest rate differential due to the fact that you do get paid to hang on to this pair over the longer term that I think the market is likely to continue to see a lot of value hunting and longer term it's possible that we could break above the 171.50 yen level an area where we had seen a lot of selling pressure due to that day when the Bank of Japan intervened and really pushed the pair down.
BoJ Intervention Has Failed.
We've almost completely wiped that out in all of the yen related pairs. So, with that being said, I think we are ready to go higher. And if the Bank of Japan were for some reason to step in and intervene, I think that will only encourage the market further to the upside when it's all said and done. The Bank of Japan simply doesn't have much it can do to send the market lower for anything more than a short-term blip. Because of this, I think we will have a lot of people who are bit cautious about shorting the yen jumping into continue to see this market go higher. Ultimately, this is a market that I think continues to be the bread-and-butter of most currency traders at the moment, not necessarily the EUR/JPY pair, but anything that is denominated in yen.