(MENAFN- Daily Forex)

• The euro initially did rally against the Japanese yen during the trading session on Thursday, but you can see that we pulled back just a bit from near the 200-day EMA.
• By doing so, the market has then turned around to show signs of weakness as we broke down below the 160-yen level.
• We're now at the 50-day EMA, and an area that could be supported.

This is an interesting pair for me, because we have seen the euro give up pretty significant gains during the day against multiple currencies. Initially, the euro really took off over the last couple of days as interest rates in Germany spiked, but eventually people started to think about that not necessarily being a great thing. After all, if there are concerns about spending, this can be a major factor in what people think about the currency.

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So, with that, we find ourselves in the middle of a larger consolidation area between 155 yen on the bottom and 165 yen on the top. Right in the middle of that suggests that we're near fair value. It'll be interesting to see how this plays out because it looks like the Japanese are going to tighten monetary policy a little bit. But if there's yield.

One would have to assume that they would still favor the euro. The market being right around the middle of fair value tells me that we are firmly ensconced in this range, and I think you need to continue to follow it. I don't have any interest in trying to get too cute here. I think that if we start to break down, perhaps below the 158 yen level, we'll retest the 155 yen level. If we can break above 162 yen, then I think we will go looking to 165 yen above.

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