Euro continues to struggle against Japanese yen
Euro traders initially tried to lift the currency against the Japanese yen before the Europeans came back in and crushed the strength. At this point, it looks as if the ¥120 level has offered a lot of resistance yet again, and the fact that by the time the New York traders came into the marketplace we were already back down below the ¥118 level says just how negative this market is.
The trend obviously is very negative in this pair, which makes quite a bit of sense considering that the European Union is putting out rather negative looking numbers as of late, and of course the Japanese yen is considered to be a safety currency. In fact, the Japanese yen has been rallying against most other currencies in the world, so the Euro will be any exception considering just how poor things look and the EU at this moment.
Beyond that, we also have the 50 day EMA turning lower, but it is still all the way up at the ¥121 region. That being said, it is starting to reach down towards the current trading area, so I think at this point it’s likely that a rally should be a nice selling opportunity. The fact that we have given up the gains yet again and simply can’t keep anything along the lines of a rally going tells me just how negative things are in the world. There is a serious lack of risk appetite in general, so I think the trend of buying Japanese yen will continue to push this market lower.
The technical analysis of course is negative, and as a result you should only believe in for selling opportunities. I would keep an eye on the ¥120 level above as a major resistance barrier due to the psychology of that big figure, and the fact that it was previously the 61.8% Fibonacci retracement level. The 50 day EMA is in that general vicinity, so I believe that even more resistive now.
Short-term rally should continue to offer selling opportunities and it makes the most sense that we break down towards the ¥115 level. Speaking of that 61.8% Fibonacci retracement level, typically when we break down below there the market will go looking towards the 100% Fibonacci retracement level. If that is in fact the case, we could be looking at a move down to the ¥110 level before it’s all said and done.