- The GBP/JPY gains strength around 189.85 in the European session on Tuesday.
- The crossing maintains the negative perspective below the 100 -day EMA with a bearish RSI indicator.
- The initial support arises in 188.15; The first bullish barrier is located in 190.00.
The GBP/JPY crossing rises to 189.85 during the European session on Tuesday. However, the bullish potential for the crossing could be limited amid the feeling of risk aversion, which probably drives the safe refuge currency such as Japanese Yen (JPY).
Despite the downward review of the Gross Domestic Product (GDP) of Japan for the fourth quarter (Q4), the operators seem convinced that the Bank of Japan (BOJ) will increase their interest rates even more in the midst of growing inflation in Japan. This, in turn, could support JPY in the short term.
According to the daily chart, the bassist perspective of the GBP/JPY is still in force since the crossing remains limited below the exponential mobile (EMA) average of 100 days. In addition, the downward impulse is supported by the 14 -day relative force (RSI) index, which is below the midline, suggesting that the lower resistance path is down.
The first downward objective for the crossing arises in 188.15, the minimum of February 21. Extended losses could see a fall to 187.87, the lower limit of the Bollinger band. A decisive rupture below the mentioned level could pave the way around 187.00, representing the psychological and minimum of February 7.
On the positive side, the first bullish barrier to monitor is the psychological level of 190.00. The crucial resistance level for the crossing arises in 192.50, the 100 -day EMA. A sustained trade above this level could attract some buyers around 192.70, the upper limit of the Bollinger band. Further north, the following obstacle is observed in 194.71, the maximum of January 27.
GBP/JPY DAILY GRAPH
And in Japanese faqs
The Japanese Yen (JPY) is one of the most negotiated currencies in the world. Its value is determined in general by the march of the Japanese economy, but more specifically by the policy of the Bank of Japan, the differential between the yields of the Japanese and American bonds or the feeling of risk among the operators, among other factors.
One of the mandates of the Bank of Japan is the currency control, so its movements are key to the YEN. The BOJ has intervened directly in the currency markets sometimes, generally to lower the value of YEN, although it abstains often due to the political concerns of its main commercial partners. The current ultralaxy monetary policy of the BOJ, based on mass stimuli to the economy, has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to fight against inflation levels of decades.
The position of the Bank of Japan to maintain an ultralaxa monetary policy has caused an increase in political divergence with other central banks, particularly with the US Federal Reserve. This favors the expansion of the differential between the American and Japanese bonds to 10 years, which favors the dollar against Yen.
The Japanese Yen is usually considered a safe shelter investment. This means that in times of tension in markets, investors are more likely to put their money in the Japanese currency due to their supposed reliability and stability. In turbulent times, the Yen is likely to be revalued in front of other currencies in which it is considered more risky to invest.
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.
