- The British pound initially plunged during the trading session against the Japanese yen but has turned around to show signs of life.
- Again, at this point, the 200 day EMA looks as if it is offering support right along with the 50 day EMA.
- I think we probably get a run toward the 195 yen level at this juncture.
If we can break above there, then I think you really start to see the British pound punish the Japanese yen. The Bank of Japan seemed a little wishy-washy as it were about interest rate hikes. The British pound is offering quite a bit more in the way of swap than the Japanese yen is. In fact, the official bank rate vote tally was a little bit more hawkish than anticipated coming out of London during the day. So that has a lot to do with what we are seeing here.
I Remain Bullish Overall
With this, I would be somewhat bullish. I recognize that there’s a lot of fear out there and the Japanese yen can be enticing during those times, but it certainly looks like somebody is willing to jump into this pair and take advantage of cheap British pounds. I have no interest in trying to get short of this market, at least not at the moment and at this point would be watching the 50 day EMA as a potential signal, which is just below the lows of the session, right around the 191.90 yen level. Expect a lot of noise, expect a lot of choppiness, but I do think at this point in time, it looks like we’re going to try to rally back towards that crucial 195 yen level. A move above there opens up another 300 pips to the upside.
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