GBPJPY is trending higher and looks ready for a test of its ascending channel support. Applying the Fib tool on the latest swing low and high shows that the 61.8% level lines up with support at the 152.50 minor psychological level.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This signals that the rally is more likely to resume than to reverse. In addition, the 100 SMA lines up with the 50% Fib at 153.00 and the 200 SMA is closer to the channel bottom.
Stochastic is still heading lower for now to indicate that selling pressure is in play. However, the oscillator is nearing oversold conditions to show that pound bears might be exhausted and buyers could take over.
A number of medium-tier reports are due from the UK for the first half of the week before the manufacturing and construction PMIs are released during the latter half. Apart from that, Brexit-related updates could also push the pound around.
Meanwhile, the Japanese yen doesn’t have plenty of top-tier catalysts on deck, but it could take its cue from dollar price action stemming from the FOMC decision. Market sentiment and global bond yields could also dictate yen movement.
Medium-tier reports from Japan include household spending, retail sales, and the unemployment rate due in the next Asian session. The UK has net lending to individuals, mortgage approvals, and the BRC price shop index.
By Kate Curtis from Trader’s Way