FxWirePro- Buy GBPJPY on dips

The GBP/JPY currency pair surged more than 200 pips on the weak yen. The pair hit a high of 194.83 yesterday and is currently trading at approximately 194.39. Notably, the Potential Reversal Zone (PRZ) is set at 200.20, indicating levels where traders may anticipate a potential price reversal.

Recent data shows that the U.S. Consumer Price Index (CPI) rose by 2.7% in November, up from 2.6% in October, the highest rate since July 2024. The core CPI, which excludes food and energy, increased by 3.3%. This has led many to expect a quarter-point interest rate cut by the Federal Reserve in their meeting on December 18, 2024. While inflation is still a concern, the data may give the Fed room to lower rates.

From a technical standpoint, the GBP/JPY is trading above short-term and long-term moving averages, indicating a prevailing uptrend. The immediate resistance level stands at 195. A breakout above this threshold could lead to further gains toward levels of 195.30/196.90/197.79. On the downside, support is positioned at 193.70 with additional levels of interest at 193.40/193/ 192.50/191.80/191.40/190.60/190/189.35, 188.50, 186.79, and 183 should the price fall further.

Analysis of key indicators such as the Commodity Channel Index (CCI) and Average Directional Index (ADX) suggests a mixed trend in the market.

Trading Strategy: Buy on dips

Considering the current technical and fundamental landscape, traders may want to adopt a strategy that involves buying on dips around the 194 mark, establishing a stop-loss (SL) around 192.80 The anticipated target prices for this approach could be 195.30/196.