Despite the panic on the market in the beginning of the year due to the spread of the coronavirus, the pound was very stable against the yen. A flat trend was formed, which actually completed this week, when the rates broke through the support line and rushed down. The reason for the rapid fall is the spread of the coronavirus in Europe, as well as the statement of the Bank of England on its readiness to reduce the rate to support the economy. Macroeconomic reports from the UK, which turned out to be slightly worse than expected, and uncertainty about the future terms of the UK's trade with the EU also contribute to the decrease. Therefore, the pound lost its positions against all major currencies, reaching its lowest level for the last 4 months.
The yen is strengthening under the influence of external factors and the growth of Asian indices, after reports from China about the reduction in the number of newly infected patients. The situation will not change in the near future, but next week, the JPY will also depend on the GDP reports for the fourth quarter of 2019. Also of great importance will be reports on the trade balance in China, to which the market can react after the market opens on Monday.
On the chart, we can see signs of a consolidation, but on the H1 chart there is still a downward shift, so we believe that the minimum has not yet been reached. During the week, a downtrend will be formed. Thus, the deals to SELL remain effective. Most technical analysis tools also indicate the efficiency of short deals.
