The British pound has gone back and forth during trading on Tuesday as we continue to see a lot of noise in the Japanese yen-denominated pairs.
GBP/JPY
The British pound has gone back and forth during trading on Tuesday as we continue to see a lot of noise in the Japanese yen-denominated pairs. Quite frankly, that's not a huge surprise considering all of the problems that the Bank of Japan finds itself dealing with. The most obvious one is the fact that inflation is starting to drop a bit in Japan.
Top Regulated Brokers
Furthermore, you also have the situation where the weakening Japanese yen has forced the Bank of Japan to intervene in the yen-related pairs, but the market will continue to see a lot of pressure to the upside because, quite frankly, there's no point in trying to short a pair that is going to cost you at the end of every day.
Carry Trade Dynamics and Key Technical Levels
The 215 yen level is an area that I think is the floor with the 50-day EMA underneath, offering a bit of support as well. To the upside, we have the 218 yen level, an area that has shown itself to be resistance. And if we can break above there, then it's likely that we go much higher, perhaps to the 220 yen level.
Keep in mind that you get paid at the end of every day to hold this pair. The carry trade is something that a lot of people will be watching closely, not just here, but in other places. The British pound continues to have a lot of strength to it in general, as the Bank of England is a bit more hawkish than many others, and most certainly than the Japanese central bank. I prefer to buy dips, and I do think eventually we probably go higher over the longer-term.
Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.