GBPJPY has been trending lower on its 1-hour time frame, moving below a descending trend line. Price bounced off the 124.75 area and is pulling up to test the trend line once more. Applying the Fib tool on the latest swing high and low shows that the 50% level coincides with the falling resistance.
A higher correction could last until the 61.8% Fib or the dynamic resistance at the 100 SMA. This is also close to a broken short-term support zone around the 130.00 major psychological level, which might keep gains in check moving forward.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. The gap between the moving averages is widening so bearish pressure is getting stronger. However, stochastic is still on the move up to show that buyers are in control of price action for now until the oscillator reaches the overbought zone and turns lower.
UK economic data came in better than expected, with the headline CPI up from 0.6% to 1.0% and the core CPI up from 1.3% to 1.5%. This was higher than the consensus at 0.9% and 1.4% respectively, as price gains were buoyed by a weaker pound in September.
For today, UK jobs data is due, with the claimant count change expected to show a 3.4K increase in joblessness, higher than the earlier 2.4K rise. The average earnings index is expected to hold steady at 2.3% while the unemployment rate is projected to stay unchanged at 4.9% as well. UK retail sales data is due on Thursday.
As for the yen, only Japan’s all industries activity index is due, and it might show a 0.2% gain compared to the earlier 0.3% uptick. Earlier in the week, Japan’s industrial production was downgraded from 1.5% to 1.3% to show a weaker pace of growth.
By Kate Curtis from Trader’s Way