Source: PaxForex Premium Analytics Portal, Fundamental Insight
The Japanese National CPI for March increased by 0.2% monthly and 2.7% annualized. Forex traders can compare this to the Japanese National CPI for February, which was flat at 0.0% monthly and rose by 2.8% annualized. The Japanese National Core CPI for March increased 0.3% monthly and 2.6% annualized. Forex traders can compare this to the Japanese National Core CPI for February, which was flat at 0.0% monthly and increased by 2.8% annualized.
UK Retail Sales for March was at 0.0% monthly and increased by 0.8% annualized. Forex traders can compare this to UK Retail Sales for February, which expanded by 0.1% monthly and decreased by 0.3% annualized. UK Core Retail Sales for March contracted by 0.3% monthly and rose by 0.4% annualized. Forex traders can compare this to UK Core Retail Sales for February, which increaseby 0.3% monthly and decreased by 0.4% annualized.
Today’s trading session is light on economic data, but traders could weigh Israel’s limited military strike on Iran in retaliation for the large-scale air assault against Israel this past weekend and how it could impact oil prices and inflation. Oil and gold prices spiked following the attack, with Bitcoin tumbling. Inflation is the primary focus of markets, as the US Fed could deliver no interest rate cuts this year. It compares to expectations for six 25-basis point reductions at the end of 2023, which traders trimmed to three in early 2024. Yesterday’s US 5-year TIPS auction showed investors expecting inflation to remain sticky, as yields surged from 1.710% to 2.242%. Shorter-dated treasuries also saw minor increases. Other Fed data showed a minor decrease in the Fed’s balance sheet from 7,438B to 7,406B, an ongoing reminder of quantitative tightening. Reserve Balances with Federal Reserve Banks dropped from 3.616T to 3.330T.
The forecast for the GBP/JPY turned cautiously bearish, driven by technical data and the Japanese Yen’s status as a safe-haven asset. The Tenkan-sen and the Kijun-sen have flatlined with price action at risk of dropping below both. The Ichimoku Kinko Hyo Cloud flatlined and could narrow due to rising downside pressures. Traders should also monitor the CCI following its double breakdown from extreme overbought territory and below zero. This technical indicator has plenty of downside potential to lead price action into a sell-off. Can bears maintain control over the GBP/JPY and force this currency pair into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the GBP/JPY remain inside the or breakdown below the 191.150 to 191.900 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 191.550
- Take Profit Zone: 187.950 – 188.850
- Stop Loss Level: 192.300
Should price action for the GBP/JPY breakout above 191.900, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 192.300
- Take Profit Zone: 192.900 – 193.500
- Stop Loss Level: 191.900
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