The EUR/JPY pair initially tried to rally during the day on Wednesday, but turned around to form a bit of a shooting star. Ultimately though, the 100 level below is massively supportive and as that is the case, I think they will eventually find enough buyers in that region for the markets turned around. The Bank of Japan of course is looking at this area as a bit of a “line in the sand”, and as a result I think this is a market that will continue to bounce around this general vicinity. If we can break above the 101 handle, we could then reach higher. Nonetheless, I don’t have any interest in selling and if we break down below the 100 level I think that sooner or later the BoJ will get involved.
There are several different ways that they could get involved, quantitative easing being the most likely scenario. However, we could very well see the Bank of Japan intervened directly in the Forex market as well, because they are one of the quickest central banks in the world to get involved in the Forex markets. Alternately, if we fall from here I believe that one way or the other the markets will bounce. With this being the case, I feel that it’s only a matter of time before we can go long, but you have to keep in mind that there is a lot of noise above so more than likely it is a scenario where you will buy and buying again on short-term charts at best.
One thing that you can look into is this particular pair in order to decide what to do around the world when it comes to the Japanese yen. For example, I believe and have noticed that the Bank of Japan has used this particular pair as a measuring stick in general. So if this pair breaks down, you could see reactive moves in the GBP/JPY, EUR/JPY, and AUD/JPY pair’s as well as many others. Because of this, you must always watch this pair if you want to trade the Japanese yen at all, even if it’s not against the US dollar.