The British pound finds itself locked in an ongoing battle, stubbornly hovering around the ¥185 level against the Japanese yen, a currency grappling with its own set of challenges. The Bank of Japan's relentless efforts to suppress interest rates cast a shadow of negativity over the yen's prospects. With the passage of time, it becomes increasingly evident that the market is gearing up for an attempt to breach the high set by the shooting star candlestick on Monday. Such a move would pave the way for a potential assault on the recent highs, residing near the ¥187 mark. In this scenario, it's not just the British pound that would shine, but the Japanese yen might find itself losing ground against nearly every other currency.
At the present juncture, it is prudent to view every dip in this market as a potential opportunity to accumulate "inexpensive British pounds." Undoubtedly, the Japanese yen stands out as one of the feeblest currencies on the global stage. The Bank of Japan's policy stance remains far from tightening its monetary policy, leaving no room for optimism. Consequently, it seems more plausible than not that we will eventually break free from the current range and set our sights on the ¥190 level. The path to such heights may be long, but we are steadily accumulating the necessary momentum.
Avoid Shorting the Market
- Another noteworthy factor is the rise of UK gilts by 7 basis points overnight, indicating that interest rates in the United Kingdom are on a steady incline. This development provides further impetus for the GBP/JPY pair to ascend.
- Given these factors, the market appears to be engaged in a tug of war with a distinct upward bias.
- Attempting to short this market is a proposition that holds no appeal, especially when considering that the Japanese yen is among the least desirable currencies in the current market climate.
Unless there is a marked shift in the Bank of Japan's stance, the prospects for buying this pair or any assets tied to the Japanese yen remain dim. Ultimately, it seems inevitable that we will break free from our current constraints and embark on a journey towards higher levels, with the market's floor hovering closer to the ¥180 level.
Potential signal: I am a buyer – right here. I have a stop at the 184.50 level. I am aiming for 187.50
Ready to trade our free daily Forex trading signals? We’ve shortlisted the best Forex trading brokers in the industry for you.