(MENAFN- Daily Forex) The eur/jpy initially tried to rally a bit during the trading session on Friday but gave back gains rather quickly to turn around and show signs of hesitation. At this point, the market looks as if it is trying to break down to the ¥143 level, where the 50-Day ema seems to be coming into the picture. It is rising, so that also gives you a little bit of dynamic support if we reach down to that area. That being said, I would anticipate that we would see a little bit of value hunting on these dips. It's also worth noting that the ¥142.50 level was also an area that previously had been resistant, so it should be potential support.
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On the upside, the ¥146 level has been resistance previously, as we have seen the last couple of weeks struggling with that. Furthermore, it's an area that has seen a lot of selling pressure previously, so with all of that being said I think it's going to be difficult to get above there. If we do, then we could go to the ¥148 level above, which was a major high that we formed last year.Noise Ahead
Keep in mind that the Bank of Japan continues its yield curve control program, meaning that the Bank of Japan will continue to keep interest rates at 50 basis points or lower on the 10-year yield, meaning that they will have to step in and buy bonds in order to keep those rates down. The Bank of Japan will have to print Japanese yen in order to buy those bonds, and therefore it floods the market with that currency.
Ultimately, this is a market that I think will continue to be very noisy, but I'm looking at this through the process of trying to find a short-term pullback that shows a bit of a bounce at the same time. I do believe eventually the Euro continues to go higher against the yen, not necessarily because of what's going on with the Euro, just that the Japanese yen is going to have so many issues and therefore I do believe that the weakening Japanese yen will be the big story here. Ultimately, this is a market that is going to be noisy, but I think it still favors the upside over the longer term.
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