GBP/JPY Forecast: Testing the Top of the Overall Range Against the Yen

• The GBP/JPY has been making waves in the forex market as it reaches the ¥167 level, an area that has previously been difficult to break.
• The market has a lot of noise in this general vicinity, so traders should expect a bit of a short-term pullback.
• Nevertheless, this is a market that is moving on risk appetite, and the pullback at this point may provide a short-term buying opportunity.

If the market continues to move upward, we may see a reach toward the ¥168.50 level, followed by a move towards the ¥170 level, and then the ¥172 level, where it peaked in October of last year. On the downside, the 200-day EMA is a strong support level, which sits near the ¥162.50 level.

The Japanese yen has been suffering due to the yield curve control policy coming out of Tokyo. If the Japanese are looking to do yield curve control, it is challenging to imagine that the Japanese yen will be a strong currency. This is especially true considering just how strong the British pound has been as of late.

Dips Should Continue to Attract Buyers

It is essential to note that the ¥165 level will cost quite a bit of interest. Therefore, if the market pulls back, it could allow traders to find a bit of value, providing an opportunity for the market to continue its upward trend. Traders can anticipate a lot of noise, but ultimately, the British pound will remain strong and will likely provide ample buying opportunities.

The market does tend to have a lot of risk appetite attached to it, and the yen will continue to be seen as a potential safety play – but only if the Bank of Japan isn’t having to print a ton of yen to fight the rising rates in the Japanese Government Bond market. The ten-year is pegged to 50 basis points or lower, but if it were to get close to there, it means that the BoJ will have to print currency to buy those bonds. However, it looks as if now we are going to see a lot of volatility, which could cause that short-term pullback that one would expect at this lofty level. With this, dips should continue to attract buyers over the next few weeks.