Marshall Gittler
Trading Analysis
GBP/JPY
- The dollar traded unchanged or higher against most of the other G10 currencies during a quiet morning in Europe. The only currency that managed to outperform USD was CAD, while the main losers were GBP, JPY and AUD with the former depreciating the most. The pound fell against the dollar despite moderately GBP-positive news from the Rightmove house price index, which showed an acceleration in UK house prices in February. GBP seems to have hit some squaring of long positions after ending last week as the biggest gainer.
- JPY was the second loser in line, as Nikkei closed the Asian day up 0.6% and all the European stock indices are trading above their opening levels, showing that risk appetite has returned to the markets.
- The only economic data release was Italy’s current account balance. The surplus declined to EUR 1848mn in December from 2828mn in November, but this has no impact on the euro.
- GBP/JPY consolidated near the 61.8% Fibonacci retracement level of the 2nd Jan. - 4th Feb. decline. A clear break above that level followed by a violation of the resistance at 171.45 (R1) may argue that the aforementioned decline has bottomed and it was nothing more than a 38.2% retracement of the 7th Aug. - 2nd Jan. uptrend. However, negative divergence is identified between the RSI and the price action, while the MACD although in a bullish territory, crossed below its trigger line. This shows decelerating positive momentum and increases the probabilities for a downward corrective wave in the near future.
- Support: 169.10 (S1), 167.20 (S2), 166.10 (S3)
- Resistance: 171.45 (R1), 173.60 (R2), 174.80 (R3)
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