GBPJPY Technical Analysis

GBP

• The BoE left interest rates unchanged as expected at the last meeting
  removing the tightening bias but reaffirming that they will keep rates high for
  sufficiently long to return to the 2% target.
• The employment report missed expectations with an uptick
  in the unemployment rate and an easing in wage growth.
• The UK CPI missed expectations across the board but with
  Services inflation remaining sticky, which continues to support the BoE’s
  patient stance.
• The latest UK PMIs improved from the prior month with the
  Services PMI beating expectations and the Manufacturing PMI missing.
• The market expects the first rate
  cut in June.

JPY

• The BoJ kept its monetary policy unchanged as expected at the last meeting
  with interest rates at -0.10% and the 10 year JGB yield target at 0% with 1% as
  a reference cap.
• The last Japanese CPI beat expectations although all
  measures eased further from the prior readings.
• The latest Unemployment Rate remained unchanged hovering around
  cycle lows.
• The Japanese PMIs improved for both the Manufacturing
  and Services measures although the former remains in contractionary territory.
• The Japanese wage data beat expectations by a big margin.
• The Tokyo CPI, which is seen as a leading
  indicator for National CPI, recently came in line with expectations with the
  measures increasing from the prior report.
• The market sees a 50/50 chance that
  the BoJ hikes rates in March.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY is bouncing
from the resistance turned support at
188.67. The sellers for now remain in control as market participants continue
to position for the BoJ to exit the negative interest rates policy. We can also
notice that the latest rally diverged with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the target should be the base of the divergent
formation around the 185.21 level. We can expect to find sellers around the red
21 moving
average.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price is
approaching a key swing high level where we can also find the 50% Fibonacci
retracement level and the daily 21 moving average for confluence.
This is where we can expect the sellers to step in more aggressively with a
defined risk above the swing high to position for a drop into new lows. The
buyers, on the other hand, will want to see the price breaking higher to invalidate
the bearish setup and increase the bullish bets into new highs.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more closely
the recent price action with the price now basically at the resistance
zone. If we get a strong rejection and the price breaks below the black
counter-trendline,
the sellers will have a confirmation for more downside and will likely increase
the bearish bets into the 185.21 level. The buyers, on the other hand, should
lean on the counter-trendline to position for a break above the resistance zone
with a better risk to reward setup.

Upcoming Events

Tomorrow we get the US PPI, the US Retail Sales and the
US Jobless Claims figures. On Friday, we conclude the week with the University
of Michigan Consumer Sentiment survey.

This article was written by FL Contributors at www.forexlive.com.