The expected 0% change in the Japanese PPI for March failed to lessen the British Pound’s strength against the Japanese Yen. The GBPJPY is up 1.31% for the week and is currently trading at a 16-week high as the Japanese Yen continues to decline.
The Japanese Yen continues to be weighed down by the Bank of Japan’s decision to continue their ultra-loose monetary policy, with the bank’s Governor Ueda Kazuo recently emphasizing the necessity of the negative interest rates and yield curve control (YCC). The remarks on Monday were enough to push the GBPJPY currency pair above the February highs as the Japanese Yen fell against its major currency pair.
The 4H chart shows that the currency pair, also known as the “Beast”, recently broke above the February highs and entered a zone that has previously seen increased selling pressure which could make it difficult for the bulls to extend their rally. A short-term pullback could be on the horizon, but the bulls could be confident in regaining control if the price action respects the 23.60% Fibonacci retracement level.
The bulls would need to sustainably break above the 166.965 resistance level, a level of significance for the bulls, to have a chance to test the next resistance level at 168.515. However, the bears are hoping that the recent selling pressure above the 165.854 supported by the RSI, which currently hovers around the overbought range, will help pull the price lower. Therefore, the bears could push the price below the new support level at 165.854, a level of interest for the bears. A breakthrough below 165.854 would bring the 50-day moving average and the support level at 165.295 into play.
With the Bank of Japan, Governor signals that he will continue with the current ultra-loose monetary policy continuing to hammer the Japanese Yen in the short term, the bulls could be confident in continuing their rally as long as the price action respects the 23.60% Fibonacci retracement level.
Sources: TradingView, Financial Times, Investing.com.
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