The GBPJPY currency pair, also known as the Beast, is on track to close a fourth consecutive month on the green as the monetary policy divergence continues to drive the movement of the currency pair. The Bank of England (BoE) potential interest rate hike bets continue to support the British Pound in the short term.
Also, the Bank of Japan’s (BoJ) Governor Kazuo Ueda comments on the necessity to keep the ultra-loose monetary policy has weakened the Japanese Yen. The BoJ will release its interest rate decision on Friday, with the market mainly expecting the bank to continue with the decade-long monetary policy, which would continue to weaken the Yen.
The 4H chart shows that the bulls were able to reel the bears back within the ascending wedge following the bears’ failure to sustain the break below the wedge. With the bears in control following the bulls’ stumble at the resistance level of 167.955, a sustained break below the 166.949 psychological level could signal a bearish session. A sustained break would bring the 165.845 into play, with the 23.60% Fibonacci retracement level acting as immediate support after. A break below the 23.60% Fibonacci retracement level would give a boost to the bears’ march towards the support level at 165.303.
However, should the bears fail to sustain a move below 166.949, the bulls could regain control and look to retest the 167.955 resistance level, a level of significance for the bulls. A sustained break above 167.955 could entice buyers to enter the market and push the price towards the resistance level of 168.674.
The recent Beast pullbacks show that the currency pair bears are willing to fight back, but the fundamentals suggest that the market is bullish on the currency pair. Therefore, until the bears sustain a break below 165.845, the 167.955 and 168.674 will remain in play.
Sources: TradingView, Reuters, Nasdaq.com.
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