The GBP/JPY struggled to find its footing during Thursday's trading session, as the market remained choppy and indecisive. Global growth concerns and uncertainty around interest rates have created a lot of noise in the market, making it difficult to get a clear direction.
However, the ¥165 level underneath is providing some support, particularly with the 50-Day EMA now entering the picture. This technical indicator is often used by traders, adding to the level's significance. If the market can break above the area near ¥168, it may open the possibility of a move to the ¥170 level. But the market has struggled to clear this area, creating a lot of resistance.
Looking at the chart, it's clear that the British pound is highly sensitive to risk appetite, and there are major concerns around the world about global growth and interest rates. These concerns are creating a lot of noise in the market and making it difficult for traders to get a clear sense of direction.
Noise Ahead
- Despite the current uncertainty, I believe that this is a "buy on the dip" type of market.
- The Bank of Japan continues its yield curve control program, which keeps the absolute top of yields for the 10-year GDP at 50 basis points.
- If interest rates rise, the bank will print more currency, which is exactly what caused the Japanese yen to lose so much strength last year.
There is likely to be a lot of back-and-forth in the market over the next several weeks as traders try to figure out what's going to happen with global growth. The area near ¥168 will continue to be challenging, but if we can break above it, the market may be free of a lot of resistance, creating a "buy-and-hold" situation. It will take a lot of work to make that happen though.
In the end, the British pound is likely to continue to be very noisy and choppy in the near term. However, I believe that the market favors a "buy on the dip" approach, with the ¥165 level providing support and the potential for a move higher if the market can break above ¥168. Traders should keep a close eye on global growth concerns and interest rates, as these factors will likely continue to impact the market.
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