EUR/USD, USD/JPY and EUR/JPY Forecasts – Euro and Yen Weak on Friday

EUR/USD Technical Analysis

The Euro broke down pretty significantly during the trading session on Friday and we are now well below the 1.15 level. I’ll be watching this and how it closes because, quite frankly, if we do close below the 1.15 level, it’s likely to really start to fall pretty significantly. In fact, I think we would be looking at the 1.14 level and then eventually the 1.11 level.

Rallying from here probably just opens up another selling opportunity on signs of exhaustion. The Euro looks like it’s really soft and that does make sense considering that the Euro region is going to have to deal with a lack of energy.

USD/JPY Technical Analysis

The US dollar continues to see a lot of upward pressure, and I think ultimately, we are looking at the 160 Yen level as a bit of a barrier. When you look at longer-term charts, we’re pretty close to breaking out from a high that goes all the way back to 1990. In other words, this pair could really take off.

I don’t have any interest in shorting this pair. I think anytime the dollar pulls back against the Japanese Yen it ends up being a buying opportunity. This flies in the face of the Yen being a safety currency, but quite frankly, the Bank of Japan has a lot of issues and it does not look like they’ll be able to tighten monetary policy any further while the US dollar is backed up by a fear premium around the world and the interest rate differential at the same time. In this pair it’s almost like a perfect combination.

I expect trouble at about 160 Yen, but if we get through there, this could be a buy and hold, possibly for years. We’ll just have to wait and see.

EUR/JPY Technical Analysis

The Euro has fallen against the Yen, showing just how weak the Euro actually is, considering how weak the Yen is. The market is going to continue to ask questions of the Yen, I think more than the Euro, but until we get the energy portion sorted out, this probably stays somewhat sideways with more of an upward bias longer term, I think. So, buying the dip isn’t the worst strategy. You do get paid a little bit of swap at the end of every day, but I think this shows just how somewhat weak the Euro truly is.