The British pound has rallied during trading on Tuesday, as markets have turned around completely as far as risk appetite is concerned. Part of this is due to Donald Trump suggesting that the US government was going to do some type of fiscal stimulus and that a news conference is coming within the next 24 hours, and then of course the other part is that the Japanese are going to start with huge fiscal stimulus as well. Because of this, there was more of a “risk on” feel to the beginning of the session.
GBP/JPY Video 11.03.20
It should also be noted that the 200 day EMA is sitting just above the gap, and therefore there was a certain amount of technical resistance. At this point, the market will probably see more selling pressure, because quite frankly unless the United States does something extraordinary, it’s very likely that traders will look at that as a “sell the fact” type of event after “buying the rumor.” At this point, the market did find a bit of support at the 61.8% Fibonacci retracement level, but unless there is some type of complete change in attitude, it’s very likely that we could roll over and reach towards the ¥130 level. However, if the market does close on the daily candlestick above the 200 day EMA, then it’s likely that the market goes to the ¥140 level above which is a large, round, psychologically significant round figure. The 50 day EMA is reaching towards that level, so therefore it’s going to be extraordinarily important.