- The Japanese yen the British pound has pulled bank of it against the Japanese yen during trading on Monday, but it is still fairly close to the overall resistance barrier.
- It does look like buyers are trying to lift it up.
- I think this is an interesting pair to watch because right around the 196.50 yen level there is a significant amount of resistance.
It being broken to the upside could open up the possibility of a move to the 199 yen level short-term pullbacks. I think we continue to see a lot of support near the 195 yen level which is of course a large round psychologically significant figure. If we break down below there then the market is likely to go looking to the 50 day EMA closer to the 193 yen level.
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Looking to Buy the Dip?
In general, I think you've got a situation where traders are looking to buy the dip, mainly due to interest rate differential. The fact that we've recently shown that the Japanese bond market is a bit of a train wreck just waiting to happen. There's been multiple days there's been nobody willing to buy Japanese government debt. That is a disaster just waiting to happen. the Bank of Japan almost certainly is going to have to step in and do a bit of quantitative easing before this is all said and done.
I think what you've got in front of you is a chart that expresses this. If we can break out to the upside, I believe that not only is the 199 yen level possible, but we may even go all the way to the 200 yen level. It's not until we break down below the 200 day EMA, presently near the 192.50 Yen level, that I'd be concerned about the bullish attitude of this pair.
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