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Rebound Limited; Bulls Need Break Above 216.20 to Reverse Trend
Summary:
Against the backdrop of heightened tensions in the Middle East and weak domestic wage growth, Japan’s economy faces fresh uncertainties. Markets widely expect the Bank of Japan (BoJ) to keep interest rates unchanged this week, while the upcoming spring wage negotiations outcome is likely to be a key determinant of the future policy path.
Buy
TradingGBPJPY
EXP
211.790
Entry Price
217.250
TP
207.500
SL
211.843 +0.020 +0.01%
0
Point
Flat
207.500
SL
CLOSING
211.790
Entry Price
217.250
TP
Fundamentals
Renewed conflicts in the Middle East have pushed up commodity prices, placing greater cost pressure on Japan, a country heavily reliant on energy imports. Rising energy prices not only increase import expenditures but also weaken the trade balance and exert persistent downward pressure on the yen. Higher energy costs squeeze both corporate profits and household purchasing power, dealing a dual blow to the economy.
Meanwhile, doubts remain over the sustainability of Japan’s wage growth. Although wage hikes have hit record levels in some sectors and strong growth is expected again in this year’s spring wage negotiations, such increases have not transmitted broadly across the economy as in past cycles, leaving overall wage growth insufficient.
Against this backdrop, the BoJ’s policy choices have grown more complex. Maintaining accommodative policy to support the recovery could exacerbate yen depreciation and boost inflation; tightening to stabilize the currency and prices, meanwhile, may weigh on already fragile economic growth.
Markets expect the BoJ to keep its policy rate unchanged at 0.75% this week. Solid wage data in January–February and stable core inflation indicate the reflation process remains on track, providing some ground for policy normalization. However, the BoJ is more likely to wait for the final results of spring wage negotiations to confirm whether wage growth is sustainable.
From an inflation perspective, modestly rising oil prices combined with a weaker yen theoretically provide grounds for future rate hikes. However, sharp volatility in oil prices could raise stagflation risks and delay policy tightening.
Overall, markets do not view an April rate hike as a done deal. A more realistic policy window is seen in June–July, when the BoJ may decide after obtaining clearer signals on wages and inflation.
Technical Analysis
GBPJPY remains under intraday pressure. A modest rebound occurred during the European session, but the overall structure has not fully turned bullish. In the short term, bulls need to break above the key resistance at 216.20 to confirm a bottom and unlock further upside.
A sustained break above 213.30 would pave the way for a retest of the previous high near 215.00, with short‑term momentum likely to improve accordingly. Conversely, a capped rebound would keep the pair in a choppy, soft pattern.
Trade Recommendations
Trade Direction: Buy
Entry Price: 211.00
Target Price: 217.25
Stop Loss: 207.50
Valid Until: April 15, 2026, 23:55:00
Support: 211.00/210.65/209.20
Resistance Levels: 212.32/213.73/215.02
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