Markets are bracing for a wave of high-impact economic data this week, including US inflation figures, jobless claims, and PPI, alongside the UK's GDP report and New Zealand's rate decision. GBPJPY remains in a sustained downtrend, with technical signals—such as a "Death Cross" and bearish momentum indicators—pointing to continued downside pressure. On the macro front, rising trade tensions and recession fears have driven investors toward safe havens like the Japanese yen, while the British pound has weakened amid mounting expectations for a Bank of England rate cut. The backdrop sets the stage for heightened volatility across major currency pairs.
Overview
Markets are bracing for a wave of high-impact economic data this week, including US inflation figures, jobless claims, and PPI, alongside the UK's GDP report and New Zealand's rate decision. GBPJPY remains in a sustained downtrend, with technical signals—such as a "Death Cross" and bearish momentum indicators—pointing to continued downside pressure. On the macro front, rising trade tensions and recession fears have driven investors toward safe havens like the Japanese yen, while the British pound has weakened amid mounting expectations for a Bank of England rate cut. The backdrop sets the stage for heightened volatility across major currency pairs.
Key Economic Events
Wednesday 05:00 am (GMT+3) - New Zealand: Official Cash Rate (NZD)
Wednesday 15:30 (GMT+3) - USA: Crude Oil Inventories (USD)
Thursday 15:30 (GMT+3) - USA: CPI m/m (USD)
Thursday 15:30 (GMT+3) - USA: Unemployment Claims (USD)
Friday 09:00 am (GMT+3) - UK: GDP m/m (GBP)
Friday 15:30 (GMT+3) - USA: PPI m/m (USD)
Technical Analysis
Since reaching a cycle high of 195.958 on March 27, GBPJPY has entered a sustained downtrend, declining by more than 5% and establishing a clear sequence of lower highs and lower lows—hallmarks of a bearish structural shift. The deterioration in market structure reflects a transition from bullish momentum to a more defensive trend.
The initial reversal was confirmed by the emergence of a Bearish Harami candlestick pattern, signaling early signs of trend exhaustion. This pattern marked a pivotal turning point, reinforcing the breakdown in price action and initiating a new bearish phase.
Further validating the downside bias, the 20-period Exponential Moving Average (EMA) has crossed below the 50-period EMA, forming a "Death Cross"—a technical signal often associated with diminished market confidence and an increased probability of continued declines.
Momentum indicators remain consistent with this bearish outlook. The Momentum Oscillator has moved decisively below the 100 threshold, highlighting growing downside pressure, while the Relative Strength Index (RSI) continues to trend beneath the 50 mark, suggesting sustained selling interest.
Potential Upside Targets
Should the bulls take market control, traders may direct their attention toward the four potential resistance levels below:
188.780: The initial resistance is 188.780, which represents the trough marked March 11.
190.839: The second price target is identified at 190.839, corresponding to the weekly Pivot Point, PP, estimated using the standard methodology.
194.159: The third target is established at 194.159, aligning with the weekly resistance, R1, calculated using the standard Pivot Points methodology.
195.958: An additional price target is estimated at 195.958, corresponding to the peak from March 27.
Potential Downside Targets
Should the sellers maintain market control, traders may consider the four potential support levels listed below:
183.633: The first level of support is determined at 183.633, representing the 161.8% Fibonacci Extension drawn from 186.084 to 190.050.
182.599: The second support level is identified at 182.599, reflecting the weekly support, S2, estimated using the standard Pivot Points methodology.
180.093: The third support level is seen at 180.093.
177.679: An additional downward target is observed at 177.679, corresponding to the weekly support, S3, estimated using the standard Pivot Points methodology.
Fundamentals
As trade tensions intensify following President Donald Trump's latest tariff announcements, investors are turning to the Japanese yen as a preferred safe haven. Analysts cite the yen's undervaluation, narrowing interest rate differentials with the U.S., and Japan's reduced reliance on trade as key factors supporting its strength. Despite potential economic headwinds from tariffs, the yen is expected to perform well, particularly if the Bank of Japan tightens policy while other central banks move toward easing.
The British pound fell to a one-month low against the dollar and weakened against the euro and other safe-haven currencies like the Japanese yen as investors grew increasingly risk-averse amid escalating trade tensions and recession fears sparked by U.S. President Donald Trump's tariffs. Market expectations for a Bank of England rate cut in May increased while global markets broadly sold off. Hopes for a trade negotiation faded as Trump signaled no retreat from his tariff stance, pressuring risk-sensitive assets like the pound.
Conclusion
With technical indicators reinforcing the bearish outlook on GBPJPY and macroeconomic risks continuing to mount, the path of least resistance remains to the downside. Heightened volatility is likely as markets digest a packed economic calendar and respond to ongoing geopolitical uncertainty. Unless sentiment shifts meaningfully or key resistance levels are reclaimed, safe-haven flows into the yen, and growing pressure on the pound suggests further downside may be ahead.