The Euro has been falling against the Japanese yen for some time, which of course is that much of a surprise considering that the ECB is likely to continue with monetary easing. At this point, the Euro has been struggling against many other currencies around the world, but the Japanese yen of course is a safety currency. With all of the things going on right now, it’s not a huge surprise that the Japanese yen has been favored.
The 50-day EMA is just above and has been reasonably reliable as of late. The bearish flag suggests that we could move down to roughly ¥115, which is rather eye-opening if it does kicked off. If we break down through the uptrend line, that would be the longer-term target. Alternately, if we were to turn around and break above the ¥123.50 level, it would destroy the idea of the bearish flag.
The choppiness in this pair will probably continue, because quite frankly there’s just so much confusion out there. Never forget that this is a risk barometer and therefore it looks very likely that all of the noise from a global perspective will continue to exert pressure here. That being said, we have a hammer from the Thursday session that being broken to the downside would also be very negative. With that, it’s likely that we find even more accelerated selling. Until we break above the ¥123.50 level, rallies are not to be trusted and will be sold into.
Ultimately, this is a market that is running counter to the stock markets, which isn’t normal, but with the easy money coming out of the Federal Reserve, that makes for a different dynamic. All things being equal, it’s very likely that sellers will continue to run this market, as we have more than enough uncertainty out there.
