Created on March 12, 2025

• The euro has initially pulled back just a bit against the Japanese yen on Tuesday, only to skyrocket toward the 200-day EMA.
• This is a pair that I think, given enough time, will probably try to break above the ¥162 level.
• If it does, that opens up the possibility of moving all the way to the ¥165 level.
• This is an area that I think would be somewhat resistant to further pressure to the upside, as it has been important multiple times in the past.

Short-term pullbacks, I think, continue to find buyers because of the interest rate differential and the fact that interest rates in Europe are rising via the bond market. That has a major influence on what happens with the euro itself. The Japanese yen, by contrast, has the Bank of Japan and its ultra-loose monetary policy, despite the fact that it’s probably going to raise interest rates one more time.

It’s also worth noting that the market has been banging around between the 50-day EMA and the 200-day EMA indicators, so there are a certain number of questions about whether or not we’re going to break out of this area. If we do break out, typically, that means you’re going to get some momentum. As things stand right now and also taking into account the size and strength of the candlesticks for the trading session on Tuesday, I do favor the upside.

Swap Matters in JPY Pairs Over Time

I don’t like paying for a swap at the end of the day anyway, and generally, over the long term, that’s a loser. Short-term traders may continue to kick this thing back around these moving averages, but ultimately, I think you have a scenario where short-term dips probably bring in more buyers. I don’t have any interest in shorting. I don’t want to own the Japanese yen at this point.

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