While I looked at being long USD/JPY last week, it may also be worth looking at long GBP/JPY on a break of the top of the triangle pattern, which currently comes in at 172.93.
Fundamentally we saw a nice drop in UK unemployment, falling thirty basis points to 6.9% in the three months to February – the lowest levels since early 2009. However, as the Bank of England has said of late there is still too much slack in the labour market and this is a factor in its interest rate setting policy.
If we look at price action, the JPY has started weakening again, although I get the suspicion this has been caused by a strong move in the Nikkei, with traders selling JPY due to the inverse relationship which the JPY and Nikkei share. Yesterday we heard from Japanese finance minister Taro Aso that the Government Pension Fund (GPIF) would ‘make a move’ in the equity market in June and that clearly seems to be supporting.
Oscillators (on the daily chart) have started heading higher, with the MACD just about crossing the signal line. The five-day is looking poised to cross the ten-day moving average, but there is no clear trend here. All signs suggest traders could wait for a close break above the downtrend for long positions.