Cross-assets prepare for correction

#GBPJPY

Key zone: 198.50 - 200.00

Buy: 200.00 (on a strong positive foundation); target 202.50-203.00; StopLoss 199.30

Sell: 198.00 (after a retest of the 199 level); target 195.50; StopLoss 198.70

Several days of calm in the main cross-pairs is not a pause but a dynamic equilibrium in the market. Fundamental factors for a strong impulse are lacking, and the dollar has pulled all the attention. And we all know that any flat is a precursor of a new trend.

Forecasts for statistical data on EUR, GBP, AUD suggest minimal changes, which means the data will come out mixed and will not have a serious impact on cross-pair rates.

The fundamental background is quite aggressive due to the situation in Europe, and although the market tries to price in some factors in advance (for example, a truce in the Ukraine–Russia conflict), the decisive factor will still be the dollar. New negotiations and statements can be expected soon, but there will not be enough reaction to push cross-pairs out of the range.

The minutes of the latest US FOMC meeting are already outdated and not interesting for speculators, while the rest of the news will be ignored by the market.

UK inflation data turned out better than expected: CPI in the services sector stood at 5%, confirming strong price pressure, and the core CDI also exceeded forecasts. In the short term this supports the pound, although weakening economic growth may create additional pressure later on.

The situation with yen-related assets is also unclear. Political turbulence usually weakens the yen through a risk/instability premium, but expectations of BOJ tightening and rising JGB yields act as offsetting factors.

In July the ruling political coalition lost its majority in the upper house, but the prime minister remained in office, officially until the implementation of the US–Japan tariff deal. The state of negotiations is not discussed openly, and the market is forced to look for another point of reference.

This morning Japan’s stock market closed Wednesday trading lower amid negative dynamics from the transport and communications sectors (Nikkei 225 fell by 1.42%). At the same time, the yen is receiving strong support from the stabilization of debt yields, while the euro faces mixed signals due to cooling inflation.

For example, the EUR/JPY pair has already tested the 171.32 support (July 22 low) twice, but so far only triggered StopLoss orders on both sides of the market and nearly stalled due to lack of trading interest. For GBP/JPY the fundamental background is also neutral, with cautious support for the pound.

Keep a bearish or neutral stance and watch the dollar.

So we act wisely and avoid unnecessary risks.

Profits to y’all!