- The JPY is solidly bid in Asia.
- GBP/JPY drops to 148.94
- Bulls need a positive follow-through to yesterday's long-tailed doji candle.
GBP/JPY fell to a low of 148.94 in Asia, courtesy of the strong Yen.
The Japanese Yen's rise contradicts the uptick in the treasury yields. Also, the resilience in the US stocks (Dow rallied 250 points yesterday) has failed to cap gains in the Japanese Yen. Japanese Finance Minister Taro Aso is at least in part responsible for the rise in the Yen in Asia.
The policymaker talked down the need for FX intervention, thus allowing Yen bulls to make their presence felt.
However, the drop contradicts the widening UK-Japan 10-year bond yield differential. The spread has widened in the GBP-positive manner to 157.5 basis points - highest since early May 2016.
GBP/JPY Technical Levels
As of writing, the currency pair is trading at 149.10. A positive follow-through to yesterday's long-tailed doji candle would confirm short-term bearish-to-bullish trend change and open doors for a corrective rally to150.82 (100-day MA) and 151.26 (38.2% Fib R of recent drop).
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