The euro took a significant hit against the Japanese yen during Tuesday’s trading session. The yen has been strengthening against most other currencies, so this decrease is not unexpected. The large candlestick on the chart may indicate extreme negativity, but it might be premature to short the market at this point.
The pair’s performance will be heavily influenced by risk appetite, meaning it will rally when traders are willing to take risks. However, the opposite was true on Tuesday as traders were exiting the market. It’s worth noting that negative candlesticks like this have been reversed in the past, so there is no need to panic just yet.
It’s important to be cautious with position sizing due to potential market noise. The market previously looked to the ¥169.40 level for short-term support, but after breaking through cleanly, it may no longer be relevant. The 50-Day EMA around ¥167 is rising and could act as a support level.
Breaking above the ¥170 level would be a significant achievement for the euro and could indicate weakness in the Japanese yen. This trend has been ongoing, and it’s likely that traders will take notice as they continue to profit from the swap at the end of the session.
Overall, while the euro’s performance against the yen has been challenging, there are still opportunities for potential growth. It’s important to monitor market trends and be prepared for potential reversals in the future.