The pound remains stable while Yen loses impulse, with the feeling of the market improving.
The bearish correction since the maximum of last week about 200.00, It remains contained above 198.25 for now.
On the positive side, the pound would need to overcome the maximum of Monday, in 198.80, to relieve the bearish pressure.
The pound is rising on Tuesday, but so far it is still trapped within the narrow range of negotiation on Monday, at a short distance above the support level of 198.25. The torque is in a bassist correction since the maximum of last week, just below 200.00 within a broader upward trend.
A more optimistic market atmosphere is providing some support to the sterling pound on Tuesday, to the detriment of safe refuge yen. The data of the Gross Domestic Product and of China’s industrial production revealed that the second largest economy in the world continues to grow at a solid pace despite US tariffs, relieving concerns about the uncertain perspective of international trade.
Technical Analysis: Correcting down from the 200.00 resistance area
The immediate trend of the GBP/JPY remains negative, although the feeling of the most optimistic market has relieved the bassist impulse. The price action is maintained below the maximum of Monday, in 198.80, although the 4 -hour RSI has crossed above level 50 that divides the bassist’s bullish territory.
The pair needs to break the resistance area of 198.80 to relieve the bearish pressure and change the approach to the maximum of July 11, in 199.45, and the maximum of July 10, in 199.85.
On the other hand, a bearish reaction below the minimum of June 14 in 198.25 would find support in the minimum of July 7, which crosses the lower part of the ascending channel, about 196.80.
Feeling Risk – Frequently Questions
In the world of financial jargon, the two terms “appetite for risk (Risk-on)” and “risk aversion (risk-off)” refers to the level of risk that investors are willing to support during the reference period. In a “Risk-on” market, investors are optimistic about the future and are more willing to buy risk assets. In a “Risk-Off” market, investors begin to “go to the safe” because they are concerned about the future and, therefore, buy less risky assets that are more certain of providing profitability, even if it is relatively modest.
Normally, during periods of “appetite for risk”, stock markets rise, and most raw materials – except gold – are also revalued, since they benefit from positive growth prospects. The currencies of countries that are large exporters of raw materials are strengthened due to the increase in demand, and cryptocurrencies rise. In a market of “risk aversion”, the bonds go up -especially the main bonds of the state -, the gold shines and the refuge currencies such as the Japanese yen, the Swiss Franco and the US dollar benefit.
The Australian dollar (Aud), the Canadian dollar (CAD), the New Zealand dollar (NZD) and the minor currencies, such as the ruble (Rub) and the South African Rand (Tsar), tend to rise in the markets in which there is “appetite for risk.” This is because the economies of these currencies depend largely on exports of raw materials for their growth, and these tend to rise in price during periods of “appetite for risk.” This is because investors foresee a greater demand for raw materials in the future due to the increase in economic activity.
The main currencies that tend to rise during the periods of “risk aversion” are the US dollar (USD), the Japanese yen (JPY) and the Swiss Franco (CHF). The dollar, because it is the world reserve currency and because in times of crisis investors buy American public debt, which is considered safe because it is unlikely that the world’s largest economy between in suspension of payments. The Yen, for the increase in the demand for Japanese state bonds, since a great proportion is in the hands of national investors who probably do not get rid of them, not even in a crisis. The Swiss Franco, because the strict Swiss bank legislation offers investors greater protection of capital.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
