GBPJPY Descending Channel (Mar 30, 2017)

Price just bounced off support at the 137.50 minor psychological level and could be on its way for a test of resistance at the 139.00 major psychological mark.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which means that the downtrend is more likely to continue than to reverse. The 100 SMA is also close to the channel resistance, adding to its strength as a ceiling. 

Stochastic is pulling up from the oversold region, which suggests a return in buying pressure. If bulls are strong enough, price could break past the channel resistance and go for a test of the 200 SMA dynamic inflection point at 140.00. 

Brexit-related events seemed to go by without a hitch in the past trading sessions so the pound did not sell off too much. Still, the lingering uncertainty surrounding the negotiation process could be enough to keep a lid on the currency's gains in the near term.

As for the Japanese yen, there have been no major reports from Japan recently, leaving the yen to move based on market sentiment. So far, risk-off flows and falling US bond yields have been positive for the Japanese currency.

On Friday, Japan will print its household spending, industrial production, and CPI readings. Improvements could be enough to give the yen another boost on weaker expectations of additional BOJ easing. For today, US final GDP data and political headlines could also influence yen flows.

By Kate Curtis from Trader's Way