It appears that the British pound rallied against the Japanese yen is more a function of risk appetite during the trading session on Monday than anything else. After all, the Federal Reserve has just announced that is going to bail out Wall Street essentially, by purchasing multiple assets, and at the clip of $150 billion at a time. The corporate bond market is starting to seize up, the Federal Reserve has said that they are going to step in and support it by purchasing those bonds. This was one of the biggest issues that the stock market was worried about longer-term due to the fact that credit implosions would certainly wipe out quite a few companies, as many US companies are highly levered.
GBP/JPY Video 24.03.20
That being said, the ¥130 level above continues to offer resistance, as the market has tested this area multiple times but has not been mobile to break through, at least not on a daily close. However, it does look like we are trying to build up the necessary momentum to get that pop, and when we do it’s likely that the ¥132.50 level will be tested almost immediately, and then possibly even the ¥135 level after that. Nonetheless, I prefer shorting this market, especially if we can see the USD/JPY pair starts rolling over as well. Any rally at this point will almost undoubtedly be of the short-term relief rally version. That being said, short-term traders may continue to look towards the ¥130 region for selling opportunities based upon exhaustion.