- The British pound continues to grind higher against the Japanese yen as the interest rate differential by far is the biggest driver.
- At this point, I think it's probably only a matter of time before we break out to the upside, but it's also worth noting that the market has been very noisy.
- In general, I think short-term pullbacks end up being a nice opportunity to get long of this market yet again.
The 50-day EMA sits at roughly 190 yen, and I think that is an area that a lot of people will be paying attention to. After all, it is a large round figure and of course it is also an area that I think a lot of people will be looking at as a previous noise that could come in and offer a bit of market memory.
A Break to the Upside
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If we do break out to the upside and clear the 194 yen level, then I think the British pound will take on the 195 yen level and then eventually go looking to 200 yen, which very well could be its destination. In general, I think this is a scenario that traders continue to look at with interest and continue to get paid at the end of every session .Therefore it will continue to attract a lot of inflows as every dip seems to be a bit of a value proposition. If we were to break down below the 190 yen level, then we could see a significant fall from there but still more likely than not will just be a buy on the dip opportunity.
In general, this is a market that pays quite nicely in swap at the end of every session, and therefore I think it makes a lot of sense for the pair to continue higher, eventually. The interest rate differential will continue to be wide enough to drive a truck through, and therefore you will continue to see a lot of upward momentum, or at least see a lack of selling going forward. I have no interest in shorting this pair anytime soon.
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