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EUR/JPY & GBP/JPY crosses likely to stay bid ahead of FOMC and B

FX:GBPJPY   British Pound/Japanese Yen
Yen stays on a weak footing against majors except USD, while the greenback is being offered as markets see a very low probability of Fed statement hinting at a rate hike in June.

A weaker-than-expected rebound in the US durable goods orders figure released today added to the bearish pressure around USD.

Japanese Yen             is likely to stay on the back foot and underperform against USD compared to other majors as – Bank of Japan (BOJ) is expected to announce negative rates on loans, push rates further into negative territory, tweak its QE program. Plus, there is very little probability of a severe risk aversion before Bank of Japan rate decision is out.

Hence, JPY crosses like – EUR/JPY             and GBP/JPY             are likely to stay well bid heading into Fed and BOJ rate decision. Both crosses also appear strong on technical charts. Let us have a look at them one by one.

GBP/JPY Daily Chart

  • Cross is within a touching distance from a trend line resistance at 162.60.
  • Pair has already breached a smaller falling trend line and a rebound from 160.00 followed by a break above previous day’s high of 161.80 today indicates bulls remain in control of the pair.
  • A daily close above 162.60 would add credence to the bullish move today and may yield 164.10 (Mar 11 high).
  • Repeated exhaustion near 162.60 or failure to take out the same might result in minor correction to 160.00 levels. However, a serious fall isn’t expected ahead of Fed and BOJ.

EUR/JPY Daily Chart

  • Pair’s close above trend line (black dotted) on Friday opened doors for further gains in the pair.
  • A recovery from low of 124.69 followed by a move back above trend line has reinforced bulls and could yield 126.54 (23.6% of 141.05-122.06).
  • On the downside, the black dotted trend line remains a crucial support, under which bears may make their presence felt.
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