GBPJPY Technical Analysis | Forexlive

GBP

• The BoE left interest rates unchanged as expected at the last meeting
  removing the tightening bias but reaffirming that they will keep rates high for
  sufficiently long to return to the 2% target.
• The employment report beat expectations across the board
  with a positive revision to the December’s negative payroll figure.
• The UK CPI missed expectations across the board but with
  Services inflation remaining sticky, which continues to support the BoE’s
  patient stance.
• The latest UK PMIs improved from the prior month with the
  Services PMI beating expectations and the Manufacturing PMI missing.
• The market expects the first rate
  cut in June.

JPY

• The BoJ kept its monetary policy unchanged as expected at the last meeting
  with interest rates at -0.10% and the 10 year JGB yield target at 0% with 1% as
  a reference cap.
• The Japanese CPI beat expectations although all
  measures eased further from the prior readings.
• The latest Unemployment Rate remained unchanged hovering around
  cycle lows.
• The Japanese PMIs improved for both the Manufacturing
  and Services measures although the former remains in contractionary territory.
• The Japanese wage data missed expectations although there
  was a pick up from the prior reading.
• The Tokyo CPI, which is seen as a leading
  indicator for National CPI, came in line with expectations.
• The market expects the BoJ to hike
  rates in Q2.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY recently
couldn’t break above the high on the second try. We can also notice that the
price has been diverging with the
MACD for
quite some time. This is generally a sign of weakening momentum often followed
by pullbacks or reversals. In this case, the buyers leant on the red 21 moving average to keep
pushing into the high targeting a breakout. The sellers, on the other hand,
will need the price to break below the moving average to turn the trend around
and start targeting the 185.21 level.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a strong
support zone around the 190.35 level where we can also find the confluence with red
21 moving average and the 38.2% Fibonacci retracement level. This
morning we got a spike to the downside caused by a report saying
that some BoJ policymakers will likely say at the upcoming meeting that lifting
negative interest rates will be reasonable. Nevertheless, this is where we can
expect the buyers to step in with a defined risk below the level to position
for a break above the cycle high with a better risk to reward setup. The
sellers, on the other hand, will want to see the price breaking lower again to
position for a drop into the 186.67 level.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the bullish setup around the 190.35 level. If the price breaks above
the recent swing low at 190.67, then we can expect the buyers to increase the
bullish bets as it would be a confirmation for further higher highs to follow.

Upcoming Events

Today we have the US ADP, the US Job Openings and
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figures, while on Friday we conclude the week with the US NFP report.