The BoJ has adjusted the terms around long-term interest rates, allowing them to rise more in a move aimed at easing some of the costs of prolonged monetary stimulus.

Consequently, the yen soared across the board sending GBP/JPY down by 5% falling from a high of 167.08 to a low of 158.58.

The decision of the Bank of Japan to raise the upper range of its yield curve control of the 10-year bond from 0.25% to 0.50% boosted the Japanese Yen, that is having one of the most significant gains in years. The announcement took markets by surprise, leading to a selloff in government bonds.

From a daily perspective, the price penetrated below the point of control on the recent move from the prior swing low marked in September and has come right back into it on a correction.

Should the bears commit at this juncture, there could be more downside in store for a continuation of the move over the coming days and weeks. Recently the cross bottomed at 159.06 and it is hovering around 159.40. Before BoJ’s decision, it was trading at 166.70. On the downside, the next strong support area is seen around 158.00.

A 100% expansion of the prior consolidation daily channel's range comes in near the prior structure around 147.70. A move of just a 50% expansion of the range comes in at 153.80ish, back to the September swing lows.

However, should there be a continued correction, then a retest of the prior structure that aligns with a 61.8% ratio could be in order, albeit less likely from a fundamental standpoint at this juncture.

GBPJPY to retrieve from the order block for correction

Dec 25 2022