Global macro overview for 26/05/2017:
The National CPI index in Japan remains stable in April. The data released overnight revealed that the National CPI rose for a fourth consecutive month in April to the level of 0.4% in line with market expectations. Consumer prices excluding food and energy costs rose 0.1% in April, after falling 0.1% the previous month. The Tokyo Core CPI, which is considered a barometer of nationwide price trends, increased 0.2% and it was better than anticipated increase of 0.1%. The long-term Bank Of Japan inflation target is still at 2.0%, but the declining household spending and tightening job market might make this target difficult to reach. Nevertheless, the Japanese economy is still expanding at a steady pace of 0.5%, so the most appropriate approach for BoJ is to wait-and-see for the further events to unfold.
Let's now take a look at the GBP/JPY technical picture on the H4 timeframe. The Bears have managed to break out below the technical support at the level of 143.31 (38%Fibo) and it looks like the next target for them is at the level of 50%Fibo at the level of 141.03. The Fibonacci projection, however, indicates another target at the 100% expansion at the level of 140.59, which is close to the 61%Fibo at the level of 140.36 and technical support at the level of 140.00. The momentum indicator and stochastic oscillator support the bearish bias.
