GBP/JPY rebounds towards 162.00 amid dovish BOJ, risk-off mood

• GBP/JPY sees a quick rebound amid dovish BOJ comments.
• Risk-off mood lifts the demand for the bonds, weighing down on the yields.
• GBP/JPY bulls stay hopeful whilst above the 21-SMA support.

GBP/JPY is recovering from lower levels this Thursday while snapping a four-day uptrend to six-day highs of 162.28.

At the time of writing, the cross is posting small losses on the day to trade at 161.80, weighed down by the risk-off market profile, which has revived the safe-haven flows into the US Treasuries. This has triggered a fresh corrective decline in the Treasury yields across the curve, collaborating with the downside on the spot.

The hawkish Fed minutes combined with the lingering Russia-Ukraine war-driven risks are tempering risk sentiment, as the US dollar looks to regain its upward trajectory. Meanwhile, the latest dovish remarks from the Bank of Japan (BOJ) officials, defending the country’s ultra-loose monetary policy, are helping keep the cross afloat.

The pair is likely to remain at the mercy of the broader market sentiment, yields’ price action, the upcoming Ukraine updates and Fedspeak.

GBP/JPY: Technical outlook

From a short-term technical perspective, GBP/JPY bulls remain hopeful so long as they defend the bullish 21-Simple Moving Average (SMA) at 161.36.

A breach of the latter could bring the horizontal 50-SMA at 161.08 into play. The April 5 lows at 160.51 will be the line in the sand for buyers.

GBP/JPY four-hour chart

The 14-day Relative Strength Index (RSI), however, is inching higher while above the midline, allowing room for more upside.

Immediate resistance is seen at 162.28 (the previous day’s high), above which buyers will gear up for a fresh run-up towards 165.00.

GBP/JPY additional levels to watch