- The GBP/JPY initially fell hard against the Japanese yen during trading on Thursday, as we continue to see a lot of volatility in general.
- Quite frankly, this is a market that I think is going to continue to be very noisy but ultimately it does look like buyers are underneath and willing to step into the picture.
- If that’s going to be the case, then I don’t see much standing between here and ¥170. However, this is a market that is very noisy in general, so under the best of circumstances, you need to be cautious with your position sizing.
In this environment and the fact that we have the jobs number coming out on Friday, it’s very easy to make predictions that we could be noisy, especially if we get some type of shock to the system. I do believe that it is probably only a matter of time before we grind higher, mainly because the Bank of Japan continues to do everything, he can loosen monetary policy, while the rest of the world is busy doing quantitative tightening.
I Remain Bullish
The British pound has a whole host of issues attached to it, so it’s not quite cut and dry in this market. I think this pair will probably underperform a lot of the other yen-related pairs, but it still has an upward trajectory. The 200-Day EMA is near the ¥162.50 level, offering a bit of dynamic support on any type of plunge. While I don’t necessarily think we go below there, if we were to do so it would be a very negative turn of events.
On the upside, the ¥167.50 level seems to be somewhat resistive, so we can break above there I think a lot of people will start flooding into the market and we could take off to the upside. And that move could be the beginning of a move back to the highs near the ¥172.50 level, something that we sell a couple of weeks ago. I remain bullish, but I also recognize is going to be easier to go against the yen with other currencies that don’t have as many issues right now. With the Bank of England suggesting a two-year recession, the British pound will continue to be somewhat skittish at times.
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