This week's central bank decisions from Japan, the US, and the UK will drive market sentiment, with traders watching for policy signals. GBPJPY remains in a strong uptrend, supported by bullish technical indicators. Meanwhile, Japan's steady rates and rising wages hint at future tightening, while the pound surged past ¥194 on expectations of prolonged high rates. Economic data releases will be key in shaping market direction.
Overview
This week's central bank decisions from Japan, the US, and the UK will drive market sentiment, with traders watching for policy signals. GBPJPY remains in a strong uptrend, supported by bullish technical indicators. Meanwhile, Japan's steady rates and rising wages hint at future tightening, while the pound surged past ¥194 on expectations of prolonged high rates. Economic data releases will be key in shaping market direction.
Key Economic Events
Wednesday 04:25 am (GMT+2) - Japan: BOJ Policy Rate (JPY)
Wednesday 20:00 (GMT+2) - USA: Federal Funds Rate (USD)
Wednesday 23:45 (GMT+2) - New Zealand: GDP q/q (NZD)
Thursday 02:30 am (GMT+2) - Australia: Employment Change (AUD)
Thursday 10:30 am (GMT+2) - Switzerland: SNB Policy Rate (CHF)
Thursday 14:00 (GMT+2) - UK: Official Bank Rate (GBP)
Thursday 14:30 (GMT+2) - USA: Unemployment Claims (USD)
Friday 14:30 (GMT+2) - Canada: Core Retail Sales m/m (CAD)
Technical Analysis
Since reaching a low of 187.035 on February 7, GBPJPY has exhibited a strong bullish momentum, advancing over 3% and forming a consistent pattern of higher highs and higher lows—hallmarks of a sustained uptrend.
The initial reversal was signaled by a Tower Bottom candlestick pattern, indicating diminishing selling pressure. This shift was further validated by the formation of a failure swing reversal pattern, where the trough at 187.666 undercut its predecessor before price action decisively broke above the 193.039 swing high.
Additional technical confirmation emerged as GBPJPY breached the 50-period Exponential Moving Average (EMA), reinforcing bullish sentiment and increasing investor confidence. The emergence of a "Golden Cross," with the 20-period EMA crossing above the 50-period EMA, further strengthened the bullish case, suggesting growing upside momentum.
Momentum indicators continue to support this constructive outlook. The Momentum oscillator has climbed above the 100 threshold, while the Relative Strength Index (RSI) remains firmly above 50, signaling sustained buying interest and reinforcing the pair's upward trajectory.
Potential Upside Targets
Should the bulls maintain market control, traders may direct their attention toward the four potential res stance levels below:
196.360: The initial resistance is 196.360, which represents the 161.8% Fibonacci Extension drawn from the high point, 193.039, to the low point, 187.666.
198.939: The second price target is identified at 198.939, corresponding to the peak marked December 30.
199.793: The third target is established at 199.793, aligning with the high reached on October 30.
201.733 An additional price target is estimated at 201.733, which corresponds to 261.8% Fibonacci Extension drawn from the high point, 193.039, to the low point, 187.666.
Potential Downside Targets
Should the sellers take market control, traders may consider the four potential support levels listed below:
193.039: The first level of support is identified at 193.039, representing the peak reached on February 13.
191.369: The second support level is 191.369, reflecting the weekly Pivot Point, PP, calculated using the standard methodology.
189.645: The third support level is identified at 189.645, corresponding to the weekly support, S1, estimated using the standard Pivot Points methodology.
187.666: An additional downward target is observed at 187.666, corresponding to the swing low from February 28.
Fundamentals
Japan's central bank held its policy rate at 0.5% as expected, citing economic uncertainties, particularly around trade risks. Analysts anticipate another rate hike but remain divided on the timing, with some expecting a move as early as June. Wage growth continues to strengthen, with labor unions securing the largest increases in decades, reinforcing the BOJ's goal of a "virtuous cycle" of rising wages and prices. Meanwhile, inflation remains elevated, and investors will closely watch BOJ Governor Ueda's remarks for insights into future policy direction. The yen held steady, while the Nikkei 225 rose 0.69% following the decision.
On the other hand, the British pound climbed above ¥194 for the first time since January, driven by expectations that UK interest rates will remain higher than those of its global peers. The Bank of England is set to hold rates at 4.5% this week, with traders pricing in a smaller rate cut by year-end compared to the Federal Reserve. The pound also gained support from weaker US economic growth prospects and uncertainty over trade tariffs. Despite recent UK economic contraction, optimism around infrastructure spending and continued trade commitments with the US are providing some support for the currency.
Conclusion
With key central bank decisions and economic data releases ahead, markets remain on alert for shifts in monetary policy and macroeconomic trends. GBPJPY continues its bullish momentum, supported by strong technical indicators, while Japan's steady rates and rising wages suggest potential tightening ahead. Meanwhile, the British pound's rally above ¥194 reflects expectations of prolonged high interest rates in the UK. As global economic uncertainties persist, traders will closely monitor policy signals and data releases for further market direction.