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GBPYEN Continues to Trend Lower But the Pair May Face A Reversal In the Near Term
Written by article default Thursday, 23 September 2010 06:51
The GBPYEN continues to make lower highs for the fourth consecutive day heading into Friday’s session. As of late, the pair looks to be capped by a descending trend line, and until we see a break above this level, downside risks remain. Indeed, the Japanese yen is rallying across the board as traders seek safety amid uncertainty in the global economy. At the same time, the BoE hinted at quantitative easing during its meeting of the minutes. Some members stated that recent developments indicated that headwinds are greater than previously expected. At the same time, policy makers stood ready to respond in either direction as they balanced the upside and downside risks to the outlook of growth and inflation. With that being said, the British pound could potentially push lower, but traders should not rule out a second round intervention by the Bank of Japan as policy makers recently stated that they will stem the yen’s appreciation further if needed. At the same time, we could possibly see the yen remain relatively unchanged at its current levels as traders await Japan’s monetary policy meeting, which is important in that the intervention will need to be supported by additional quantitative easing. All in all, if our long entry position at 133.2 is triggered, this may validate additional gains towards 133.80; stop at 132.80. Trade is for the 24 hours. Cancel order if not triggered by 16:00 GMT on Friday.
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