March 17, 2023 11:8 AM

US Dollar/JPY headed towards 133.00 amid elevated risks in the Asian session

US Dollar/JPY headed towards 133.00 amid elevated risks in the Asian session

GBP/JPY is consolidating its biggest daily gain in two weeks around 161.60, down 0.30% intraday on Friday, and bracing for a second consecutive weekly loss while remaining inside an upward-sloping trend channel that has been in place since late December 2022.

The lower line of the bullish channel triggered a rebound in the previous day, but the 200-day Exponential Moving Average (EMA), which is at 162.00, challenged GBP/JPY's upside and led to the latest fall in the pair.

Additionally, the bearish MACD signals suggest that GBP/JPY sellers will likely aim for the psychological magnet of 160.00. However, if the pair falls below the channel's bottom line, which is close to 158.65, it could face further challenges.

  • GBP/JPY is currently experiencing mild losses as it reverses the bounce from the previous day's one-month low. The bearish MACD signals and repeated failures to cross the 200-EMA continue to keep sellers hopeful.
  • However, the 11-week-old ascending trend channel is currently restricting short-term downside and suggesting a gradual run-up towards refreshing the Year-To-Date (YTD) top.
  • Despite the current losses, the trend channel provides support for the GBP/JPY pair, indicating that there may be a gradual upward movement in the near future. The bearish MACD signals and the repeated failure to cross the 200-EMA have not yet managed to break the trend channel, which suggests that the overall trend may still be bullish.
  • If the trend channel continues to hold, it is possible that the GBP/JPY pair may refresh the YTD top in the coming days or weeks. However, if the pair breaks below the trend channel, it could signal a shift toward a more bearish trend.
  • If GBP/JPY drops below 158.65, there is a possibility of witnessing a south-run targeting the Year-To-Date (YTD) low of nearly 155.35.

On the other hand, if the pair breaks above the 200-EMA hurdle around 162.00, it could trigger a rally targeting the 50% Fibonacci retracement level of the pair's moves between October 2022 and January 2023, which is around 163.80 as of now.

However, it is worth noting that the bullish channel's top line around 165.00 could challenge GBP/JPY bulls beyond 163.80, and a break of this level could quickly refresh the 2023 peak, which is near 166.00 at the latest.