EUR/JPY Forecast 01/10: Buyers Return (Video)

(MENAFN- Daily Forex)

The EUR/JPY pair fell early on Wednesday, as we broke below a significant support level in the form of 178 yen. However, it looks like the buyers are returning.

The euro dropped a bit during the early part of the trading session against the Japanese yen, threatening the ¥178 level, but it has turned around to show a bit of a hammer. The hammer suggests that the ¥178 level is likely to continue to be a bit of a floor.

Top Regulated Brokers1 Get Started 74% of retail CFD accounts lose money The 181 yen level above has been resistance lately

The ¥181 level above has been resistance lately, and it is worth noting that the interest rate differential continues to favor the European Union. The Japanese, I think, are basically in a situation where they cannot raise rates anytime soon, at least not easily, because of the massive amount of debt that country has.

We have seen some interventions by the Bank of Japan, but I think those are basically to slow the market down. It is not really a situation where they plan on turning things around. Another thing that could come into play is if we get a bit of a situation where energy really flows into the European Union, that releases some of the concerns and could have this market rolling from here.

The market breaking down below the low of the Wednesday trading session then opens up a drop down to the ¥176 level, maybe the ¥175 level. Ultimately, I like buying dips in the Japanese yen-related pairs and collecting the swap at the end of every day. I am still a carry trader despite the interventions, although I am the first to admit I am much more comfortable going against the franc than the yen. But this is still essentially the same setup.

EURUSD Chart by TradingView

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