Bank of Japan Governor Kuroda was reappointed to a rare second term last week, with the implication that the Japanese yen cannot rely on any interest-rate hikes. Kuroda is expected to continue with monetary accommodation, negative base rates and direct management of the bank’s own government bond yield curve. Despite all this, the Japanese yen has been trading at 15-month highs against the US dollar and it is possible that Kuroda will attempt to talk down the country’s currency as it starts causing problems for Japanese exporters.
The GBP/JPY pair broke out of a rising wedge in the daily time frame and has found strong support at 148.60, near the 200MA and 50% retracement of the move from August 2017. The pair has failed to break this level for a few days and a reversal is possible, with upside resistance to be found at 150.20 and then 151.25. A decisive break of 148.60 is needed for a continued downside, with supports at 148.00 and 147.00.
The EUR/JPY pair broke down from a rising channel and slipped below the 200MA, before finding support at the 38.2% Fibonacci of the move from May 2017. If the recent euro weakness persists, this pair may continue trading with a bearish bias below the 200MA. In this case, a break of 131.81 would find downside support at 131.38 and 130.60. On the flip-side, any bullish reversal above 132.50 will find resistance at 133.0 and then 133.80, where trend line resistance will come into focus.
