Continues to Fight Against the Yen

Inflation remains high, despite the fact that there was a lot of noise about the Federal Reserve possibly bailing everyone out after the bailout of Silicon Valley Bank in America. 

• The GBP/JPY has experienced significant volatility in recent trading sessions, with the market breaking above the hammer from the previous session.
• This suggests that there could be an attempt to push higher from here.
• However, an inverted hammer reaching up to the ¥164 level creates uncertainty, making it difficult to imagine a scenario where the market simply takes off to the upside.

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Furthermore, the ¥165 level has served as an important ceiling, meaning that even though the market appears to be relatively bullish, it will need to do a lot of work to break out to the upside. If the market were to break down below the 50-Day EMA and the 200-Day EMA, there is a possibility that it could drop to the ¥160 level, which has shown signs of significant support in the past. This is a large, round, psychologically significant figure, and an area that has been important multiple times in the past.

However, it is important to note that the Bank of Japan is fighting interest rates, and if interest rates around the world continue to rise, they will have to print more Japanese Yen to keep the 10-year JGB below 50 basis points. This was the exact factor that initiated last year’s rally against the yen in almost all currency pairs. In other words, if interest rates continue to rise, it is likely that the Japanese Yen will get hammered against multiple pairs.

Inflation remains high, despite the fact that there was a lot of noise about the Federal Reserve possibly bailing everyone out after the bailout of Silicon Valley Bank in America. Inflation will still prove itself to be very resilient, and therefore, the Japanese Yen will continue to struggle. This has been the game all along, and I just don’t see how that changes anytime soon considering just how stubborn the inflation numbers have been around the world, and therefore we should continue to see more of the same over the longer term.

Overall, while the British pound may look relatively bullish, there are still many uncertainties in the market that could impact its performance. The Bank of Japan’s actions and interest rates around the world will play a significant role in the pound’s performance against the yen. As always, traders should stay informed and be prepared for volatility and sudden market shifts.