GBP/JPY Signal Today: Rallies After Gapping Lower (Chart)

(MENAFN- Daily Forex) Potential signal:

• I would be a buyer of this pair if we can get a daily close above the ¥190 level.
• I would be aiming for the ¥194 level, with a stop loss near the ¥188.80 level underneath.

The open on Monday we have seen the British pound gapped lower against the Japanese yen, which makes quite a bit of sense considering that risk appetite has been absolutely decimated around the world. The Monday session featured a lot of questions asked of the market, both from a global macro perspective, and from a rumor perspective. During the US session, some random person ran with the story that the United States was considering a 90 day pause on its tariffs, and that of course had volatility spiking quite drastically.

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Keep in mind that despite the fact that the Japanese yen is considered to be a safety currency, the Bank of Japan has been ultra-loose with its monetary policy. Yes, I recognize that they are starting to tighten it, but they are light years away from overcoming the Bank of England. The interest rate differential alone will continue to drive money into the British pound on days that people were not freaking out about some random headline. It is because of this that I actually prefer to get long of this pair, but I also recognize that there are some things that you need to see fall into place in order to start to take advantage of the interest rate payments at the end of every day.

EURUSD Chart by TradingView

Ultimately, we also have to pay attention to the fact that the market did at least try to break the support structure near the ¥187.50 level and even went lower than that. I think that the ¥185 level is an area of significant support that should be worth paying close attention to, but we are near it at the moment. On the other hand, if we can break above the ¥190 level, then I think you've got a real shot at seeing pretty significant gains in a market that can really take off rather quickly.

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