Why a Tempting GBP/USD Reversal is a Risky Trade
The G7 statement release Tuesday caused significant volatility across the FX market. Tailored specifically to the yen's rapid depreciation, the 'frontrun the Bank of Japan devaluation' trade has come under pressure. This additional roadblock to one of the most reliable trades - the steady advance for USDJPY and other yen crosses - makes the rapid advance look far more overbought in the short-term. Meanwhile, a sharp volatility move from the pound has positioned attractive technical patterns for GBPUSD, EURGBP and GBPJPY before major event risk - the Bank of England Inflation report. We discuss the implications and trading approaches for both the yen and pound crosses in today's video.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.