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Yen Falls versus the Pound as BoJ Move to Ease Further

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GBP/JPY surged higher during the Asian session after the Bank of Japan surprised investors by easing policy by 80 trillion yen ($726 billion) per year. The Bank of Japan also decided to increase its purchases of government debt by about 30 trillion yen. The Japanese yen plunged -1.74% versus the dollar recording a six-year low, -1.69% versus the euro and -2.67% against the pound.

As you can see on the provided daily chart, the pair has finally broken above the key level of 175.00 and is now looking to test the key level at 179.00. A break above this would be very bullish, initially prompting a move towards the previous highs of 180.70.

If we do see a pullback in the pair in the coming days, which I do not foresee at the time, support should be found around 175.00, where the 50-period SMA is ready to provide a significant support to the price action. A failure to break back below the 175.00 would act as confirmation of the original break and be very bullish, prompting a more aggressive move back towards the 180.00 area. Nonetheless, since the MACD crossed above its signal line and in a bullish territory, I would expect the upside pressure to continue.

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