GBP/JPY Price Analysis: Plummets from weekly highs, eyeing the 100-DMA at 158.23
|- The GBP/JPY paired Monday’s gains and some more, down 1.31%.
- Sentiment remains negative as Wednesday’s Asian session begins.
- GBP/JPY Price Forecast: To further extend its current losses towards 157.99 and beyond.
Risk-aversion is back for the second consecutive trading day in the week and weighs on the GBP/JPY, which plummets 200 pips as the North American session winds down. At the time of writing, the GBP/JPY is trading at 159.03.
Sentiment remains sour due to US Federal Reserve tightening monetary conditions as the central bank scrambles to bring inflation down. US S&P Global PMIs showed mixed readings, but investors’ concerns about a difficult US economic scenario cloud the outlook. Meanwhile, market players sought safe-haven protection and sold off assets that had the risk word attached to them.
On Tuesday, the GBP/JPY opened near the daily highs at 160.98 and tumbled shy of a solid supply zone around 160.01-41. Initially, the cross stabilized around the 160.30-60 area. However, once it broke below an upslope trendline near 160.50, it exerted further downward pressure until it broke below 160.02, accelerating the downtrend and reaching a fresh weekly low at 157.99.
GBP/JPY Price Forecast: Technical outlook
Once Tuesday’s trading session is in the rearview mirror, the GBP/JPY shifted neutral-downward biased, as shown by the daily chart. Despite the long-term daily moving averages (DMAs) residing below the exchange rate, price action in the 1-hour chart depicts a successive series of lower highs (LH) and lower lows (LL). Hence, a downward move towards the previously tested 157.99 weekly low is on the cards.
That said, the GBP/JPY first support would be May 19 swing low at 158.75. Break below would expose the May 24 daily low at 157.99, followed by the May 16 swing low at 157.42.
Hourly chart
Key Technical Levels
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