(MENAFN- Daily Forex)
The gbp/jpy initially tried to rally during the trading session on Tuesday, but gave back gains, and is it looks like we are going to give up the 50-Day EMA. This makes a certain amount of sense as there are a lot of concerns around the world right now when it comes to global growth and of course, this pair is highly sensitive to risk appetite in general. When you look at this chart, you can see that we had been rather noisy over the last couple of weeks, and I think we have a bit more of a correction coming.
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However, you should also keep in mind that the Bank of Japan continues to work with yield curve control, so they are essentially printing“unlimited yen.” However, it's also worth noting that the falling yen may be getting a little bit of relief if we continue to see yields drop globally. It's also probably necessary to start thinking about this in terms of British pounds, as the British pound itself is going to struggle. The British pound has been saddled with an economy that's about to go into a two-year recession, at least according to the Bank of England.I Don't Like the Idea of Buying the Yen
Now that we are below the 50-Day ema , it looks like we are trying to take out the ¥165.50 level. After that, we will have the ¥164 level as potential support, and then eventually the ¥162.50 level where the 200-Day EMA is currently sitting. Ultimately, I don't like the idea of buying the Japanese yen against much, but if we were to suddenly see a turnaround in the fate of the Japanese yen overall, this is probably going to be the strongest pair for the yen when it comes to major currencies as the British pound has so many issues.
For example, I would not want to short the USD/JPY pair as quickly, mainly because even if the US were to slow down the tightening, the reality is it is still light years above Japan and will remain so for years. That yield will make a huge difference and therefore I think we will continue to see upward pressure more than anything else in that pair. Great Britain on the hand, has a lot of issues that could come into play and make the pound less attractive.
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