(MENAFN- Daily Forex)

• We initially did try to rally in this pair during the trading session on Friday but gave back the gains as we see a lot of confusion right now.
• The speech by Jerome Powell Jackson Hole suggested that the Federal Reserve was willing to perhaps cut interest rates in the future.
• So that had a major influence on a lot of different things that have gone on.

However, this is a little bit different in the situation because this should be moving higher with risk appetite increasing. Granted, the latest move to the upside has slammed into the 200 yen level again, which looks like it's a brick wall. Underneath current levels, we have the 50 day EMA near the 198.40 yen level, which is rising and has for the most part acted like a bit of a trend line since the middle of May.

Could Buyers Return?

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The question now is whether or not buyers will come back in and try to pick up value. The interest rate differential most certainly favors the British pound against the Japanese yen. But I find this move a little bit concerning due to the fact that it's not moving how you would anticipate. Granted, the Japanese yen got a boost against the US dollar after that Jerome Powell speech, maybe this is a temporary thing. Obviously, if we can break above the 200 day EMA, then I think we could really go much higher, probably 204 yen, possibly even 208 yen.

EURUSD Chart by TradingView

If we drop from here and break down below the 50 day EMA, we could be looking at a move down to the 195 yen level. Perhaps traders are worried about the global economy slowing down. Maybe that's what they got out of the Powell speech. If that's the case, then a fall from this level would make quite a bit of sense as it is remarkable resistance as well. And of course, you could see a flood to safety assets. This is a pair that's worth watching.

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