GBPJPY has been moving sideways recently, bouncing off support near the 182.00 major psychological level and heading towards resistance at the 184.00 major psychological mark. If the top of the range continues to hold as resistance, GBPJPY could move back to the bottom of the range once more.
Stochastic is moving lower, indicating that pound bears are in control of price action at the moment. This suggests that an early selloff might take place before price even tests the range resistance. However, once the oscillator reaches the oversold area and hints at a pickup in buying pressure, another test of 184.00 might be possible.
The UK economy has been printing impressive economic figures so far, suggesting that the path of least resistance could be to the upside. This could mean that GBPJPY might move past the 184.00 handle at some point, depending on the outcome of this week’s set of reports.
The economic catalysts could come later in the week, as Japan is set to print its inflation and spending reports on Friday. Another set of weak figures could remind market participants that the BOJ might need to implement more easing efforts later on.
Should a breakout in either direction take place, the pair could be in for around 200 pips in gains or losses, which is the same height as the rectangle. Bear in mind that Greek debt negotiations are likely to carry on in the next few weeks, as EU officials assess the proposals to be passed by Greek officials.
Risk appetite is supported for now, as higher-yielders had a relief rally after the Greek debt talks resulted in a four-month extension of their bailout program, lowering the risk of a debt default and further financial uncertainty in the region for now.
By Kate Curtis from Trader’s Way