- The GBP/JPY rallied a bit during the trading session on Friday, as we continue to see upward pressure overall.
- After all, the market has been very noisy, but it seems like every time we fall, it seems like the markets will continue to find somebody willing to step in and pick this market up.
- Ultimately, this is a situation where we are going to be paying close attention to the area just above, as it has already offered resistance multiple times.
The 50-Day EMA sitting just below could offer support, and therefore I think you need to pay close attention to it. Ultimately, I think this is a scenario where you will see more noise than anything else, but you must favor the upside because regardless of what happens, the Japanese yen does not seem to be able to pick up strength for a longer-term room, at least not against this currency. The ¥165 level underneath the 50-Day EMA also looks to be important, so I would pay close attention to that as well. The market will continue to be noisy regardless of what we see next, recognizing that this pair is highly sensitive to risk appetite.
If we were to break above the highs of the last couple of weeks, then it’s likely that the ¥170 level will be attacked, and then eventually the ¥172.50 level. I do think we eventually get that move, as the Bank of Japan continues to fight interest rates as hard as they can, with the Japanese yen being printed and massive amounts as they buy unlimited bonds. Because of this, there is a natural inclination to sell the Japanese yen, even though the British pound has to worry about a recession.
Speaking about the British pound, it is rising quite nicely against the US dollar, so it’s likely that we will see this pair continue to favor the upside regardless, even though you could argue that both of these currencies have a lot of issues behind them. Regardless, the one thing that you should probably keep in mind is that it is a very noisy market, so you need to be very cautious with your position size in this type of environment, especially as it’s almost the end of the year.
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