- During the trading session on Friday, we have seen the Euro drop a little bit against the Japanese yen, only to turn around and show signs of life.
- By doing so, the market looks as if it is going to continue to hover around the crucial ¥160 level, an area that’s been important multiple times in the past.
- Because of this, I think you have to look at the market through the prism of “market memory.” After all, this area has been significant support in the past, so the fact that it would offer resistance right now is not a huge surprise.
Central Banks
The European Central Bank is in a rate cutting cycle, while the Bank of Japan is now starting to talk about inflation, and therefore the likelihood of trying to tighten monetary policy in Japan is picking up. This obviously is good for the Japanese yen, but at the same time, you also have to keep in mind that the risk appetite has a part to play as well. The Euro has recovered quite a bit recently, so it has had a little bit of follow through in this pair. That being said, I begin to question whether or not we have enough momentum to continue going higher, especially after forming that neutral candlestick right at the 50 day EMA, suggesting that the technical analysis is still a bit concerning, but if we were to break above the highs of the trading session on Thursday, I think it opens up a move to the 162.33 level, where we have the 200 Day EMA currently sits.
Top Forex Brokers
If we break down below the low of the Thursday session, then that could send the euro plunging, perhaps as low as ¥156, where we had bounce from previously. Ultimately, this is a market that will continue to be very noisy, but ultimately, I think that if you watch this pair for the next day or 2, it should give you a clear signal.
Ready to trade our daily Forex analysis? We’ve made a list of the best forex demo accounts worth trading with.