Market Participants May Be Watching the Pound-Yen Pair’s Potential for Recovery

Market Participants May Be Watching the Pound-Yen’s Potential to Rebound

02.05.2024

In the previous day’s U.S. currency trading, the U.S. dollar weakened following the FOMC’s decision to keep interest rates unchanged. The USD/JPY pair fell from 157.993 to 157.016. It moved from above the 20-period moving average on the hourly chart to below it.Federal Reserve Chair Powell stated, “It looks like it will take longer than previously anticipated to gain confidence that inflation is slowing.” Despite the retreat in expectations for an interest rate cut, the pair subsequently plummeted further, briefly touching 153.010.

Among European currencies, the pound fell against the yen. The GBP/JPY pair dropped from 197.415 to 191.784, breaking below the 200-period SMA on the hourly chart.On the 4-hour chart, the 200 SMA acted as support, triggering a rebound. On the daily chart, the pair briefly dipped below the 20 MA. While some view the decline in cross-yen pairs as a result of currency intervention by the Bank of Japan, the price has continued to test lower levels during today’s Asian session; therefore, traders should be cautious of further declines in the pound during European trading hours.

Today, the South Korean Consumer Price Index is scheduled for 8:00, the Japanese Monetary Base for 8:50, the Indonesian Manufacturing PMI for 9:30,at 2:00 PM, Japan’s Consumer Sentiment Index; at 3:30 PM, Switzerland’s Consumer Price Index; at 4:00 PM, Turkey’s Manufacturing PMI; at 4:55 PM, Germany’s Manufacturing PMI; at 5:00 PM, the Eurozone’s Manufacturing PMI; at 5:30 PM, Hong Kong’s Real GDP;at 21:30: Canada’s International Merchandise Trade, U.S. Trade Balance, and U.S. Initial Jobless Claims; at 21:45: Remarks by BOC Governor McClem; at 23:00: U.S. New Manufacturing Orders; and at 23:30: U.S. Weekly Natural Gas Inventories.We will carefully monitor the pound-yen pair’s potential for recovery following its decline.