The yen’s broad recovery continued for a second day on Wednesday as traders continued to pair short positions against the currency in wake of recent jawboning from BoJ and Japanese government policymakers regarding JPY weakness. GBP/JPY thus dipped as low as the 159.00 level at one point but has since recovered back to the 160.00 area, where it continues to trade with on the daily losses of around 0.5%, meaning the pair has reversed nearly 3.0% lower versus earlier weekly highs in the mid-164.00s.

The 20 and 200-period Exponential Moving Averages (EMAs) at 155.43 and 147.26 respectively are scaling higher, which adds to the upside filters.

Meanwhile, the Relative Strength Index (RSI) (14) has shifted into a bullish range of 60.00-80.00, which indicates a fresh impulsive wave going forward.

Should the asset test the upper end of the flat channel near 158.00, the cross will start advancing towards the previous week’s high at 161.50, followed by monthly highs at 164.65.

On the contrary, yen bulls may dictate the price if the cross drops below the previous week’s low at 156.38, which will drag the asset towards the round level support at 154.00. Breach of the latter will send the asset towards the 50 EMA at 152.71.

Nevertheless, the pair, for now, has stalled its recent sharp pullback from the 164.65 area, or the highest level since May 2016 touched earlier this week and remains at the mercy of developments surrounding the Russia-Ukraine saga. The incoming geopolitical headlines will play a key role in driving the broader market risk sentiment and demand for the safe-haven JPY, which, in turn, should provide some impetus to the GBP/JPY cross.

GBPJPY To Extend Hawkish Maneuver

Mar 31 2022