- GBP/JPY once again attracted some dip-buying in the vicinity of the very important 200-DMA.
- Signs of stability in the markets undermined the safe-haven JPY and extended some support.
- The upside seems capped as the focus remains on developments surrounding the Ukraine crisis.
The GBP/JPY cross recovered over 100 pips from the daily low and held steady near mid-154.00s during the early part of the European session.
The cross continued showing some resilience and attracting fresh buying near a technically significant 200-day SMA amid receding safe-haven demand. The initial knee-jerk market reaction to the weekend’s development surrounding the Ukraine crisis remained limited, which, in turn, was seen as a key factor that acted as a tailwind for the GBP/JPY cross.
Global risk sentiment took a hit after Russian President Vladimir Putin upped the ante and put nuclear-armed forces on high alert on Sunday. The market nervousness, however, eased a bit, at least for the time being, after the Russian negotiator said that they are interested to reach an accord with Ukraine as soon as possible.
This, along with modest intraday recovery in the equity markets undermined traditional safe-haven assets, including the Japanese yen. That said, any optimistic move in the markets seems capped amid the risk of a further escalation in the conflict. Hence, the focus remains on the Russia-Ukraine dialogue, starting today at the Belarusian-Ukrainian border.
In the absence of any major market-moving economic releases from the UK, the latest geopolitical developments will play a key role in influencing the broader market risk sentiment. This, in turn, will drive demand for the safe-haven JPY and provide some impetus to the GBP/JPY cross, allowing traders to grab some short-term opportunities.