TECHNICAL ANALYSIS
On the daily chart, we can see that the last leg higher in GBPJPY diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the price has eventually broken out of the key trendline and 38.2% Fibonacci retracement level and confirmed the reversal. The pair is now likely to fall into the swing low around the 176.32 level.On the 4 hour chart, we can see more closely the break below the key trendline and the support around the 38.2% Fibonacci retracement level. If the price breaks below the recent low around the 180.70 level, the sellers are likely to pile in even more to extend the fall into new lows. From a risk management perspective, a better short opportunity would be around the downward trendline where there’s also the 38.2% Fibonacci retracement level for confluence.
FUNDAMENTAL ANALYSIS
The US Jobless Claims data, which is very important for both the Fed and the market. Strong readings are likely to keep global yields high, while weak figures might cause them to drop and benefit the JPY. On Friday, we will get the latest US PCE data and a few Japanese economic releases such as the Tokyo CPI, the Unemployment Rate and Retail Sales. Strong Japanese data, especially the Tokyo CPI, might give the JPY a boost.
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