The Japanese Yen (JPY) showed resilience against both the British Pound (GBP) and the Euro (EUR) during the Asian session on Tuesday, as both GBP/JPY and EUR/JPY currency pairs edged lower after recent gains. The GBP/JPY cross retreated from its monthly high of 214.70, trading around 214.35 and down just over 0.10% for the day, following a strong rally in the previous week [1]. The move was attributed to a combination of factors, including investors pushing back expectations for the next Bank of England (BoE) interest rate hike after UK Consumer Price Inflation (CPI) slowed to 2.8% year-on-year in April from 3.3% in March [1]. Political uncertainty in the UK, with calls for Prime Minister Keir Starmer to step down, and renewed US Dollar buying also weighed on the GBP [1].
On the Japanese side, the Yen drew support from Bank of Japan (BoJ) Deputy Governor Himino Ryozo's comments that the central bank will continue to raise policy rates based on economic activity, prices, and financial conditions [1]. However, concerns about Japan's economic vulnerability to ongoing energy supply disruptions from the Middle East tempered further Yen strength [1]. Technical analysis indicated that GBP/JPY's recent rebound from the 100-day Exponential Moving Average (EMA) near 211.00 supports a bullish outlook, suggesting potential dip-buying at lower levels [1].
Meanwhile, the EUR/JPY pair hovered around 184.90 after modest gains, maintaining a constructive bias as it traded above both the nine-day and 50-day EMAs, which are clustered just below 185.00 [2]. The 14-day Relative Strength Index (RSI) at 49.05 indicated neutral momentum, with the pair positioned at the upper boundary of a descending channel pattern. A sustained break above this channel could trigger a bullish reversal and open the way for a move toward the all-time high of 187.95, recorded on April 17 [2]. On the downside, immediate support lies at the 50-day EMA of 184.86 and the nine-day EMA of 184.84, with further declines potentially targeting the three-month low of 181.87 (March 16) and the five-month low of 180.81 (February 12) [2].
Currency heat maps from both articles show the GBP and EUR were generally weaker against the JPY on the day, with GBP/JPY down 0.09% and EUR/JPY down 0.02% [1][2]. No significant market-moving economic data was scheduled for release on Tuesday, and both articles suggest caution before positioning for further downside in the Yen crosses [1][2].
CONCLUSION
Both GBP/JPY and EUR/JPY retreated from recent highs as shifting rate expectations and political uncertainty weighed on the Pound and Euro, while the Yen found support from BoJ policy signals. Technical indicators suggest underlying demand for the Yen crosses, but caution is warranted before expecting further declines. The market impact is moderate, with traders awaiting clearer signals for the next directional move.