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GBPJPY Update: Dragon set to move higher

GBPJPY Update: Dragon set to move higher

Although Brexit is setting barriers in front of Sterling’s fast recovery, the macroeconomic data from the UK keep coming promising.

BoE’s data-dependent stance and “no further rate cut is possible as long as the data comes positive” calling is another promising sign for GBP bulls.

On the other side, the BoJ Monetary Policy statement and latest speculations about the BoJ may have to announce further stimulus.

BoJ MP Statement Paragraph 2: The Bank will continue with “Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control,” aiming to achieve the price stability target of 2 percent, as long as it is
necessary for maintaining that target in a stable manner. It will continue expanding the
monetary base until the year-on-year rate of increase in the observed consumer price index
(CPI, all items less fresh food) exceeds 2 percent and stays above the target in a stable
manner. As for the policy rates, the Bank expects short- and long-term interest rates to remain
at their present or lower levels as long as it is necessary to pay close attention to the
possibility that the momentum toward achieving the price stability target will be lost.

Japanese Yen gets demand as a safe haven. Its safe-haven status is in danger lately as the impact of the coronavirus is very close to Japan, the second is the step-up in fears that Japan could fall into recession in the current quarter and the third is that the USD can offer both liquidity and yield.

The latest macroeconomic data set from Japan weighted the expectations for BoJ to announce further stimulus and increase the negative interest rate to 0.2 ( Actual 0.1)  in the next MP meeting.

Technical Overview:

We have bought the pair at 141.000 ( AB=CD ) and 142.850 ( Triangle Breakout ) and achieved our targets short term target at 144.900.

As we have mentioned in our live H4 chart, the bearish shark pattern is validated at 144.900 and we may see a minor retracement here.

The potential pullbacks toward 144.000 – 143.750 can be used as buying opportunities.

After the potential breakout of 145.300 resistance, our medium-term targets are 146.800  147.500 and 148.500.

We will update the live charts as soon as we have a new opportunity.

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