EUR/JPY likely to consolidate a little before moving higher
The Euro has been on the back-foot against the US dollar on Monday, but the Japanese yen has been losing even more ground. As the Japanese economy's slowdown has been reiterated by the latest revision to GDP data on early Monday, we are seeing substantial negatives from the land of the rising sun going forward.
After the spearheaded charge by Mario Draghi last week, we are seeing yet another round of disastrous results for the Japanese economy. At this point in time it is very difficult to see who will be ceding more ground going forward - the Euro or the Japanese yen.
For the time being we feel like the Euro is looking a touch better, despite the lower base interest rate in the Euro area. The Bank of Japan's balance sheet is expanding at a much quicker pace than any other central bank around the world especially when compared to the size of the economy.
So as the Japanese are printing more money, this creates more opportunities for binary options traders to be long on pretty much anything against the yen. So for now, at least until we see Mr Draghi and the ECB do even more to support ailing Euro Zone economies we prefer to be buying calls on the EUR/JPY.
Looking at the chart, we are currently seeing a good opportunity - 136.65 is the level we would be using as a pivot point in this pair. If we see it being reached during trading today we will buy daily calls expiring at the end of Tuesday, targeting a swift move towards 137.10-20.
However if we see prices drop and close on an hourly basis below 136.40, then there is not much left to do, but take the additional risk of buying daily puts around those levels to regain trading opportunity on the other side of this very slow pair this year.