Market participants are keeping a close eye on whether the GBP/JPY pair can recover from its decline

Market participants are keeping a close eye on whether the GBP/JPY pair can recover from its decline

02.05.2024

In the previous session, the U.S. dollar weakened after the FOMC decided 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.Fed Chair Powell stated, “It looks like it will take longer than previously anticipated to gain confidence that inflation is slowing.” Despite the retreat in rate cut expectations, the pair subsequently plummeted further, briefly touching 153.010.

Among European currencies, the pound fell against the yen. GBP/JPY dropped from 197.415 to 191.784.It broke below the 200-period SMA on the hourly chart. On the 4-hour chart, the 200-period SMA acted as support, triggering a rebound. On the daily chart, it briefly dipped below the 20-period MA. While some view the decline in cross-yen pairs as a result of the Bank of Japan’s currency intervention, the price has continued to test lower levels during today’s Asian session; therefore, caution is advised regarding a potential decline in the pound during European trading hours.

Today’s schedule includes South Korea’s Consumer Price Index at 8:00, Japan’s Monetary Base at 8:50, Indonesia’s Manufacturing PMI at 9:30, Japan’s Consumer Sentiment Index at 14:00, Switzerland’s Consumer Price Index at 15:30, Turkey’s Manufacturing PMI at 16:00, Germany’s Manufacturing PMI at 16:55, the Eurozone’s Manufacturing PMI at 17:00,at 5:30 PM Hong Kong Real GDP, at 9:30 PM Canada International Merchandise Trade, U.S. Trade Balance, and U.S. Initial Jobless Claims, at 9:45 PM remarks by BOC Governor Macklem, at 11:00 PM U.S. Factory Orders, and at 11:30 PM U.S. Weekly Natural Gas Inventories. We will closely monitor the recovery potential of the GBP/JPY pair following its decline.