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GBP/JPY backs away from one-month highs as key resistance levels hold


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GBP/JPY fails to break above the 100-day MA in overnight trading


ForexLive

After having moved to two-week highs earlier yesterday, the pair moved higher in overnight trading as the yen weakened on the back of improved risk sentiment and touched highs not seen since 2 August. However, price failed a test of the 61.8 retracement level @ 145.92 and the 100-day MA (red line) and that sees sellers stay in control in the bigger picture.
Market sentiment is a little fragile to begin the day with Asian equities slumping and that has seen the yen retrace some overnight losses. As a result, the pair is slipping lower and is now close to the 145.00 handle again.
Looking ahead, Brexit headline risks remain as the key driver for the pound while the yen is tied to trading sentiment for the most part. European equities have started the session with a slightly better tone but US equity futures remain flat still on the day. If anything, European investors will be looking towards Wall St again today for clues on how to proceed.
That said, barring any headline surprises, the pair should hold a little lower into US trading before we get the next catalyst to drive markets. US Treasury yields are also flat on the day and that is offering little direction for traders to at upon so far.
For buyers, moving above the 100-day MA is a key level as that will open up further moves to the upside but with the trade rhetoric still looming large sellers still have an excuse to defend it for the time being. At this juncture, it’s going to take a relatively strong positive Brexit headline to be the real game changer for GBP/JPY.
Otherwise, I expect the pair to continue to fade any upside moves if it fails to make a break above the 100-day MA this week.

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