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British Pound vs Japanese Yen Technical Analysis
The British pound has rallied just a bit during the course of the trading session, then gave up some of those gains. All things being equal, the 50-Day EMA underneath sends some support into the market, therefore I think a bit of a bounce opens up the possibility of a move to the ¥185 level. If we can break above the ¥185 level, then the market goes looking to the ¥187 level, an area where we have seen a lot of resistance previously. Quite frankly, I do think that it is probably only a matter of time before we take off to the upside, so I am very bullish of this market but also recognize that we have had quite a bit of noise as of late.
Whether or not the Japanese yen gets eviscerated over time remains to be seen, but I still think it’s very possible that the British pound trades at ¥200. That being said, I don’t necessarily think that the market is going to get there right away, and there will be the occasional massive pullback. Alternatively, this is a situation where the market continues to move on interest rate differential, which of course favors pretty much anything but the Japanese yen.
If we were to break down below the 50-Day EMA, then I think the ¥180 level is an area where there has been significant support in the past, and at the moment I believe it is the “floor in the short-term market.” As long as that’s the case, I think that you have a scenario where you will eventually take off to the upside, but we need to see something settled going forward. Remember, it takes quite some time to change the overall trend of the currency pair, and I just don’t see that being the case in the short term. Longer-term, that may happen but it would take the Bank of Japan completely reversing its overall monetary policy.
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