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USD JPY - FUNDAMENTAL ANALYSISJapanese yen strength over time. While the yen underperformed during the global monetary tightening phase, in our view, the currency has scope to outperform later this year. We now believe the BoJ will take advantage of a tactical opportunity to further tweak its policy settings in Q4-2023 to further normalize the government bond market. Such a policy move adds to our constructive medium-term outlook for the yen. Yen outperformance over time should also be supported by the end of central bank tightening and a transition toward easing, as well as a U.S. recession in the second half of 2023.
Short
by thunderpips
GBP JPY - FUNDAMENTAL ANALYSISMonetary Policy: A Hawkish Stance? The BoE's impending monetary policy decision is a critical factor underpinning Sterling's performance. The analysts' consensus is that the BoE will adopt a hawkish stance, with a 25 basis point hike in the bank rate. This move would bring the bank rate to 4.50%, in line with market expectations. "We expect the BoE to hike the Bank Rate by 25bp bringing it to 4.50%, which is fully priced by markets," says Kirstine Kundby-Nielsen, Analyst, FX Strategy at Danskebank. She adds, "In our base case of a 25bp hike, we expect the reaction in EUR/GBP to be rather muted on the release but move slightly higher during the press conference." Similarly, Valentin Marinov, Head of G10 FX Strategy at Credit Agricole, also foresees a rate hike. However, he points out that the Monetary Policy Committee (MPC) may remain divided over the need for further aggressive hikes. "We expect that the MPC will deliver a 25bp rate hike today to lift the bank rate to 4.50% but think it will remain divided on the need for further aggressive hikes," says Marinov. Rate Hike Cycle: Nearing its Peak? Another hotly debated topic among analysts is the trajectory of the BoE's rate hike cycle. While some believe that the current cycle is nearing its peak, others argue for its continuation, contingent on the data. ING Economics' FX Strategist, Francesco Pesole, suggests that the BoE might be close to hitting the peak in its rate hike cycle. He cites the primary drivers of inflation, namely food prices and core goods inflation, as temporary phenomena and expects a rapid deceleration in CPI later this year. "Today’s 25bp hike may well be the last one in this cycle," says Pesole. "The drivers of higher-than-projected inflation have primarily been food prices and some surprising stickiness in core goods inflation: neither of those trends look likely to be long-lasting," he adds. On the other hand, Danskebank's Kundby-Nielsen anticipates that the BoE will communicate a 'pause' in its hiking cycle to fully assess the impact of previous rate increases. However, she highlights that this decision will be heavily data-dependent. "In its statement we expect the BoE to prime markets for a pause in the hiking cycle as the central bank wants to fully evaluate the effect from previous Bank Rate increases before deciding on next steps," says Kundby-Nielsen. "However, as always, all future decisions will be data-dependent," she adds. Outlook for the Pound Sterling: Where Next? The impending BoE decision is also expected to have significant ramifications for the sterling. While the overall outlook appears cautiously optimistic, the currency's fate is contingent on multiple factors, including the BoE's future monetary policy stance and the pace of economic recovery. MUFG's Senior Currency Analyst, Lee Hardman, observes the sterling trading close to its year-to-date highs ahead of the BoE meeting. The strengthening of the sterling, particularly against the euro, reflects the fading investor pessimism about the UK's economic outlook. Hardman also notes the resilience of the UK economy and the persistent inflation and wage growth, which puts pressure on the BoE to maintain its rate hike cycle. "The pound is continuing to trade close to year-to-date highs ahead of today’s BoE policy meeting," says Hardman. "The resilience of the UK economy at the start of this year alongside still uncomfortably strong inflation and wage growth keeps pressure on the BoE to keep raising rates," he adds. Francesco Pesole of ING Economics also discusses the sterling's recent strength, attributing it in part to aggressive market expectations of BoE tightening. However, he believes that these hawkish expectations may be excessive and could be scaled back. "We acknowledge that part of GBP’s recent strength has been due to the market’s aggressive expectations about BoE tightening, and therefore recognise there are downside risks as those (excessive, in our view) hawkish expectations are scaled back," says Pesole. BoE's Forward Guidance and Sterling's Reaction Much of the sterling's reaction post-BoE decision would depend on the central bank's forward guidance. Tullia Bucco, Economist at UniCredit Bank, anticipates that the BoE will likely maintain a data-dependent approach without offering explicit rate guidance, leaving the sterling's performance hanging in the balance. "A 25bp rate hike to 4.50% is expected, and sterling’s reaction will therefore likely mostly depend on the message that BoE Governor Bailey conveys in his press conference," says Bucco. "The risk is that no rate guidance will be delivered today, with the BoE stressing that further rate decisions remain data dependent, which might not offer sterling much support either," she adds. Nikesh Sawjani, Economist at Lloyds Bank, highlights that the 25bps rise would make it the twelfth consecutive hike in the current cycle which began in December 2021. The cumulative tightening since then would total 440bp. Sawjani draws attention to the fact that current CPI inflation is much stronger than the BoE had anticipated, with March's headline CPI at a substantial 10.1%, notably above the BoE staff forecast of 9.2%. Sawjani also anticipates an upward revision of GDP forecasts, backed by possible GDP growth in Q1 and survey evidence of improved economic confidence and activity at the start of Q2. Additionally, he expects that fiscal measures from the March Budget and lower-than-assumed energy prices will likely support real incomes, further bolstering GDP. "New BoE economic forecasts will provide an update on the medium-term growth and inflation outlook," says Sawjani. "Overall, it seems likely that GDP forecasts will be revised higher. All else being equal, that would lead to a higher medium-term inflation profile although not sufficiently to prevent an undershoot of the 2% target in 2024 and 2025," he adds.
Short
by thunderpips
USD JPY - FUNDAMENTAL ANALYSISJapanese yen strength over time. While the yen underperformed during the global monetary tightening phase, in our view, the currency has scope to outperform later this year. We now believe the BoJ will take advantage of a tactical opportunity to further tweak its policy settings in Q4-2023 to further normalize the government bond market. Such a policy move adds to our constructive medium-term outlook for the yen. Yen outperformance over time should also be supported by the end of central bank tightening and a transition toward easing, as well as a U.S. recession in the second half of 2023.
Short
by thunderpips
1
GJI've been quiet in that I haven't posted in a while but I have been monitoring the charts. So now I would like to firstly apologise to myself for not committing and doubting the work needed to be done. Secondly, I would like to apologise to anyone that does follow me and gets any value from what I do. This is my current vision of what I see and where I believe GJ is going. We are in the correction phase of a channel, so I will wait for a break (Violent one) downwards, a retest, candle confirmation and then enter and ride it the whole way down. I am challenging myself to post everyday even if it is just comments and not a forecast.
Short
by Mhangwane1
5
Potential bullish breakout in play on USD/JPYTokyo has just opened and we see futures traders shorting the yen with decent volume, which suggests institutions have a bearish bias today on the local currency. This has pushed USD/JPY up to a 4-day high, and keeps a bull-flag breakout in play on the 1-hour chart. The flag projects a target around 135.50, but we're looking for prices to retrace towards the 113.17 high for a potential long to increase the reward to risk ratio. Note that the sideways oscillation formed a triple bottom around 134.63, before a higher low formed around 135 / 200-bar EMA to show an increase in bullish activity - which favours an upside break from its sideways range.
Long
by CityIndex
Why is the GBP/JPY an important market? The currency pairing of the British pound / Japanese yen (GBP/JPY) is one of the most traded pairs in the foreign exchange market, representing a significant quantity of daily trading. It's a pairing which is popular amongst veteran traders and newcomers alike. GBP/JPY trading hours The forex market is available 24 hours a day, but UK trading, in particular, tends to get active from 8:00 AM and taper off from 5:00 PM. Of course, there will be times during the day when this currency pair experiences higher volumes - typically around major market announcements. In the following sections, we're going to take a look at the history of the pound and Japanese yen, what factors can influence its movements over time, and why exactly sterling to yen (GBP/JPY) trading remains so popular. History of GBP/JPY To begin our overview of the pound and the Japanese yen we're going to explore the history behind both of these currencies. The pound sterling dates all the way back to around 775. It evolved into its current, modern form following decimalisation in 1971. Currently, it is the fourth most-traded currency across the foreign exchange market and represents a significant amount of daily trades all around the world. The yen was officially adopted in 1871 by the Meiji government, and as such has a more complex and rich history in comparison to some of the relatively newer currencies around the world. Since inception, the value of the yen has grown considerably and this is, in large part, due to the strong Japanese industrial complex. A thriving industry consisting of technological developments, agricultural innovation, and a range of exportable products have all historically helped the yen. Japanese yen (JPY) carry trade The yen carry trade is a phenomenon that occurs when investors borrow yen at a low-interest rate then purchase foreign currency that pays a relatively high interest rate on its bonds. A yen carry trade example would involve borrowing yen and converting it into US dollars in order to profit from US Government bonds. The carry trade is maintained by the famously low Japanese interest rate. Factors influencing the GBP/JPY Role of GBP A significant factor which affects the value of GBP is the overall performance of the economy across the United Kingdom. There are three gross domestic product (GDP) reports which are released, as follows; Preliminary GDP, Revised GDP, and Final GDP. Traders and investors will follow these reports when trying to determine the future movement in the market. The price of the pound sterling is also impacted by monetary policies enacted by the Bank of England (BOE). Whenever the BOE deem inflation to be rising too quickly they will utilise monetary policy tools to try to control the rise. During these procedures, interest rates can rise, which is another factor that traders consider when analysing the market and possible future direction for the GBP-JPY pairing. Role of JPY The Bank of Japan (BOJ) and other financial institutions release regular reports regarding interest rates and other economic data, which traders look towards when trying to determine future price movements. These figures are especially useful for figuring out possible movements in the GBP/JPY exchange rate. As Japan is such a small country – in comparison to other big players in the foreign exchange market – events such as national and natural disasters can also play a part in affecting (or destabilising) the currency and its rates. BRITISH POUND TALKING POINTS: GBP/USD is staging a recovery after sliding to fresh two-year-lows last Thursday. GBP/JPY has found resistance on a descending trendline as looked at yesterday and, so far, support has held around the 165.00 psychological level, keeping the door open for bullish breakout potential. GBP/JPY Longer-term, there’s some remaining bearish potential in here but it appears that we’re at least a few steps away before that theme develops. And I’ll start off with the weekly chart, to really illustrate what we’re dealing with. The below weekly chart shows extreme indecision over the past few months. In April, prices broke above the 160 psychological level and matters haven’t really been the same since. On an even shorter-term basis, GBP/JPY is being constrained by a trendline. This trendline is taken from tops in early and mid-June and, so far, has helped to hold the highs. I wrote about this yesterday, highlighting support in the 164.47-165.00 area. That has since held and the door remains open for bullish potential in the pair, with a breach of 166.10 opening the door for a move up to 166.85. And, after that, the double top is exposed around 168.06.
Short
by DaveBrascoFX
3
USD/JPY hits fresh multi-year high, holds above 119.00 USD/JPY hits fresh multi-year high, holds above 119.00 amid resurgent USD demand FUNDAMENTAL: 1 USD/JPY caught fresh bids on Friday after the BoJ stuck to its accommodative policy stance. A goodish pickup in the USD demand provided an additional boost and remained supportive. A softer risk tone could benefit the safe-haven JPY and cap gains amid overbought conditions. The USD/JPY pair extended its steady intraday ascent through the mid-European session and climbed to a fresh multi-year peak, around the 119.10-119.15 region in the last hour. A combination of supporting factors assisted the USD/JPY pair to regain positive traction on the last day of the week and prolong its recent bullish trajectory witnessed over the past two weeks or so. The Bank of Japan stuck to its dovish stance and left its ultra-easy policy setting unchanged at the end of the March meeting. This, in turn, weighed on the Japanese yen and pushed the pair higher amid a goodish pickup in the US dollar demand. The greenback made a solid comeback on Friday and reversed the previous day's slide to the one-week low, bolstered by the start of the policy tightening cycle by the Fed. It is worth recalling that the US central bank hike its target fund rate by 25 bps on Wednesday and indicated that it could raise interest rates at all the six remaining meetings in 2022. This, along with elevated US Treasury bond yields, underpinned the greenback. The latest leg up now seems to have confirmed a near-term bullish breakout and might have already set the stage for a further near-term appreciating move for the USD/JPY pair. The divergence in the BoJ-Fed monetary policy outlook adds credence to the constructive outlook. That said, extremely overbought conditions on the daily chart could hold back traders from placing aggressive bullish bets, at least for the time being. Moreover, a weaker risk tone, which tends to benefit the safe-haven Japanese yen, might further contribute to capping the USD/JPY pair. The lack of progress in the Russia-Ukraine peace negotiations tempered investors' appetite for riskier assets and led to a fresh leg down in the equity markets. Traders might also prefer to wait on the sidelines ahead of a meeting between US President Joe Biden and his Chinese counterpart Xi Jinping. Nevertheless, the bias seems tilted firmly in favour of bullish traders, though the technical set-up makes it prudent to wait for some near-term consolidation or a modest pullback before the next leg up. Nevertheless, the USD/JPY pair seems all set to settle near the highest level since February 2016 and record strong gains for the second successive week. 2 Holding 118.595 Puts USD/JPY in Position to Resume Uptrend The Dollar/Yen is edging higher on Friday after consolidating for nearly two sessions despite the Federal Open Market Committee (FOMC) on Wednesday signaling the equivalent of a quarter-point increase at each of its six remaining policy meetings this year, leaving investors racing to work out how much monetary tightening the economy can handle. The USD/JPY picked up some support overnight after Bank of Japan (BOJ) policymakers voted to maintain ultra-accommodative monetary settings. This move widened the policy gap with the Fed, which helped make the U.S. Dollar a more attractive asset. The main trend is up according to the daily swing chart. A trade through 119.118 will signal a resumption of the uptrend. A move through 114.651 will change the main trend to down. A change in trend to down at this time is highly unlikely, but the Forex pair is currently inside the window of time for a closing price reversal top. If confirmed, this could trigger the start of a minimum 2-3 day correction. The USD/JPY is currently straddling a pair of former tops at 118.601 and 118.658. They could become new support following the “old top, new bottom” rule. The nearest support level is a minor pivot at 116.765. Short-Term Outlook The direction of the USD/JPY on Friday is likely to be determined by trader reaction to 118.595. Bullish Scenario A sustained move over 118.595 will indicate the presence of buyers. Taking out 119.118 will indicate the buying is getting stronger. The daily chart indicates there is plenty of room to the upside with no resistance coming in until the January 29, 2016 main top at 121.678. Bearish Scenario A sustained move under 118.595 will signal the presence of sellers. A failure to hold 118.176 will break the chart pattern. This could trigger the start of a pullback with the pivot at 116.765 the next potential downside target. Side Notes Taking out 119.118 then closing below 118.595 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a minimum 2 to 3 day correction with 116.765 the first downside target. If Breaking 121 upward UDJPY can reach 125 and then 130-135! Strategy on low time frame: Go with the TREND!POSITION SIZE ONLYIF THE PRIOR POSITION STOP IS IN PROFIT(TRAILING TOPTURNS TO TAKE PROFIT LEVEL) BUYING PULL BACK RED BARS
Long
by DaveBrascoFX
1
USD JPY - FUNDAMENTAL ANALYSISJapanese yen strength over time. While the yen underperformed during the global monetary tightening phase, in our view, the currency has scope to outperform later this year. We now believe the BoJ will take advantage of a tactical opportunity to further tweak its policy settings in Q4-2023 to further normalize the government bond market. Such a policy move adds to our constructive medium-term outlook for the yen. Yen outperformance over time should also be supported by the end of central bank tightening and a transition toward easing, as well as a U.S. recession in the second half of 2023.
Short
by thunderpips
EURJPY Waiting for a LongThe ECB raises interest rates and what does the euro do? It drops drastically, especially against the EURJPY exchange rate, as we have the yen as the second safe haven currency after the CHF. My objective is to wait for the price to reach the 146.50 zone where there is an excellent demand zone. The area was identified through the 3H + 45M strategy. We will see if the market meets expectations. The objective is Long with a target of 150. Let me know your thoughts. Good trading to everyone. Forex48 Trading Academy
Long
by EdgeTradingJourney
USD/JPY -3/5/2023-• FED-BOJ divergence is on the highlight again with the Bank of Japan status-quo last week, maintaining easing policy for the time being and in the near future, disappointing bulls who were betting on a tightening policy later this year • US Dollar strength comes from an aggressive Fed's policy which is likely to persist for some time • Technically, picture is bullish while prices are trading inside an ascending channel supporting higher prices in the coming days and weeks • Daily high around 137.70 was a previous resistance level and as the history tend to repeat itself, it again acted as a selling opportunity with price trading now almost 100 pips below it • Since we are approaching the higher extreme of the channel, risk reward favors to be on the short side hoping for a move back to the lower extreme Traders, if you like this idea please comment and like ✅ Here to answer all your questions, Good luck
by RamziAbouAbdallah-CMT