Should we be wary of the upside potential of GBP/JPY, which has hit a new high for the year?

Should we be wary of the upside potential of GBP/JPY, which has hit a new high for the year?

15.08.2023

In the previous day’s U.S. currency trading, the U.S. dollar emerged as the strongest currency during U.S. trading hours, causing the EUR/USD pair to fall from 1.0960 to 1.0874. On the daily chart, the EUR/USD pair broke sharply below both the 20-day and 75-day moving averages and continued its decline, setting a new low for the month.On the weekly chart, the pair is currently positioned just below the 20-day moving average (MA). If it breaks below the weekly 20-day MA, there will be no support until the 75-day MA around 1.0807, so we should be cautious about the direction of the market during European trading hours.

Among European currencies, the pound gained ground, trailing only the U.S. dollar, which has emerged as the strongest currency. The GBP/JPY pair rose from 183.456 to 184.738, setting a new year-to-date high. On the daily chart, the pair has posted six consecutive bullish candles, and the daily RSI has not yet reached the overbought level of 70, with a buffer around 62. We will closely monitor whether the pound’s rise against the yen continues into U.S. trading hours.

Today’s schedule includes UK employment figures and Sweden’s Consumer Price Index at 3:00 PM, Switzerland’s Producer Import Prices at 3:30 PM, Germany’s ZEW Economic Sentiment Index at 6:00 PM, Canada’s Manufacturing Sales and U.S. Retail Sales at 9:30 PM,Canada’s Consumer Price Index, U.S. Import/Export Price Index, and U.S. NY Fed Manufacturing Index; at 21:30, Canada’s Manufacturing Sales, U.S. Retail Sales, and Canada’s Consumer Price Index; at 23:00, U.S. Business Inventories and the U.S. NAHB Housing Market Index; and at 24:00, remarks by U.S. Federal Reserve Bank of Minneapolis President Kashkari. We should remain cautious regarding the upside potential of GBP/JPY, which has hit a new high for the year.