GBP/JPY - Risk reversals diverge, hit 5-1/2 week low

Risk reversals diverge from a rally in the GBP/JPY cross.
Drop in risk reversals indicate rising demand for GBP puts.

Omkar Godbole FXStreet Contributor

GBP/JPY ran into bids below 50-day MA last Thursday and rose to a one-week high of 153.10 today.

However, the rise in the spot has not revived demand for GBP calls. The GBP/JPY one-month 25 delta risk reversals fell to 5-1/2 week low of -1.20, suggesting rising demand for bearish bets (puts) on GBP.

That said, the recovery in GBP/JPY from last Thursday's low of 150.19 is backed by yield differential. The 10-year UK-Japan yield has risen more than 11 basis points from the Dec. 29 low of 113.8 basis points.

GBP/JPY Technical Levels

As of writing, the currency pair is trading at 152.88. A break above 153.00 (zero levels) would expose 153.41 (Dec. 8 high) and 153.67 (Jan. 8 high). On the downside, breach of support at 152.36 (session low) could yield pullback to 151.19 (Dec. 26 low) and 151.00 (zero levels).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bearish	Neutral	Low
1H	Bearish	Neutral	Expanding
4H	Bearish	Overbought	Expanding
1D	Bearish	Neutral	High
1W	Bearish	Neutral	Low
Updated Jan 16, 04:45 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD remains depressed below mid-1.1800s; downside potential seems limited

The EUR/USD pair attracts some sellers for the second consecutive day on Tuesday and hovers below mid-1.1800s amid a relatively quiet trading action during the Asian session. The broader fundamental backdrop, however, warrants some caution for bearish traders before positioning for deeper losses.

GBP/USD trades with negative bias, eyes 1.3600 ahead of UK jobs data

The GBP/USD pair trades with a negative bias for the second straight day, though it lacks bearish conviction and holds above the 1.3600 mark through the Asian session on Tuesday. Traders now look forward to the release of the UK monthly jobs report, which will influence the British Pound and provide some impetus to the currency pair.

Gold declines as trading volumes remain subdued due to holidays in China

Gold price extends its losses for the second successive session, trading around $4,930 per troy ounce during the Asian hours on Tuesday. Gold price is trading nearly 0.7% lower at the time of writing as trading volumes stayed thin due to market holidays across China, Hong Kong, and other parts of Asia.

Top Crypto Gainers: Stable, MemeCore and Nexo rally test critical resistance levels

Stable, MemeCore, and Nexo are among the leading gainers in the crypto market over the last 24 hours, while Bitcoin remains below $70,000, suggesting renewed interest in altcoins among investors.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.