FxWirePro- GBPJPY Trade Idea

The GBP/JPY lost more than 200 pips on the strong yen. It hit a low of 189.89 and is currently trading around 189.63. Intraday trend is bearish as long as resistance 192.60 holds.

Japanese Yen is strengthening on market rumors of the Bank of Japan (BoJ) to raise interest rates earlier. BoJ has raised its short-term rate to 0.5% in January 2025, its highest in 17 years, owing to rising wages and inflation trends. Future rate hikes are anticipated if economic policies are as forecast, with rates set to hit 1% during the second half of fiscal 2025. This forecasting provides support for the Yen as speculators bet on higher future yields. The BoJ predicts core inflation at 2.4% in fiscal 2025 and 2.0% in 2026 as it moves further towards its target. Even with such hawkishness, international economic threats and US policy can influence Japan's outlook. The strength of the Yen derives from the BoJ's rate-hike willingness, manifesting desire for improvement in economics and inflation management, but international events can influence the rate.

Technical Analysis Points to Further Downside 

The GBP/JPY pair is trading above  34 and 55 EMA (Short-term) and 200 EMA (long-term on the 4-hour chart, confirming a bullish trend. Immediate resistance is at 191, a breach above this level targets of 192/192.60/193/195/196. Any close above 192 in the 4-hour chart confirms further bullishness. Downside support is at 189.40 with additional levels at 188.75/188/187.25/186/185.

Market Indicators

CCI (50)- Bearish

Directional movement index - Neutral

 It is recommended to sell on rallies around 191 with a stop-loss at 192.60 for a TP of 188.