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MENAFN- Daily Forex)
The British pound has rallied a bit during the trading session on Tuesday. I continue to monitor the ¥205 level as a potential support barrier, as it has held true for some time. Furthermore, we have also seen the market try to push back against any selling, and it's probably worth noting that the Bank of Japan continues to see a lot of resistance against its interventions.
Central Bank
The central bank will continue to drive this market in one direction or the other, and it's obvious at this point in time that the Bank of Japan can do nothing to stem the flow. After all, the market is likely to continue to see the interest rate differential and was the reason to hang on to this pair, and the fact that we ended up forming a couple of hammers in a row does suggest that people are becoming more and more comfortable with buying this market. This asset will continue to pay off at the end of every day, and therefore I think you've got a situation where eventually we will try to get back to the highs.
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Underneath, the 200 for yen level is a support barrier as well, and if we were to break down below there, then we could see this market go looking to the 50-Day EMA, which is sitting just above the ¥200 level. The ¥200 level is for me the bottom of the overall trend, and as long as we can stay above there, the market is likely to continue to go much higher. In fact, I would love to see a pullback to that area so I could buy“cheap British pound.”
That being said, it certainly looks like this is a market that is not afraid anymore, and the Bank of Japan probably understands that there is only so much you can do. At this point, it is probably more or less all about the idea of trying to slow down the destruction of its own currency as it cannot raise interest rates.
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