EUR/JPY: Resisting Advances?

The calendar is excruciatingly bare in North America today as absolutely zero economic releases are scheduled which has cleared the way for Greece to be the main driver of price action. If you’re having flashbacks to 2012, don’t feel misguided, the similarities are there and people are once again talking about a Greek exit of the Eurozone – a machination termed “Grexit.” The reason for this discussion is largely centered on political failings in the Mediterranean nation which my colleague Matt Weller described adequately earlier, so I’ll spare you the details. Needless to say, the EUR isn’t a very popular currency as we start a second straight holiday interrupted week.

Being that virtually all investors are familiar with the political turmoil in Europe’s favorite target, the question surrounding the EUR now is whether to trade the obvious (sell EUR everywhere immediately) or counterintuitively (we knew this was coming, the EUR has already sold off). Taking a quick gander around EUR related charts this morning; it is easy to see how arguments for both sides are relevant. On one hand, the EUR is toxic and has sold off against everything the last two weeks, but on the other, the Greek news hasn’t created any panic selling and the EUR has actually bounced slightly.

Regardless of what the EUR is doing at this very second though, the prospects of buying the EUR at this point seems a bit risky, however, simply selling for the sake of selling seems risky too. Therefore, it may be wise to split the difference and sell in to a rally if it takes place. As of now, the EUR/JPY may be the most ideal place to employ that strategy as it has rallied in to key Fibonacci resistance and previous price resistance. If the EUR were to sell off any further, this currency pair may be the place to most effectively sell in to the rally.

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