British Pound/Japanese Yen Could Break Below 139 If Dow Sustains Drop Below October 10 Lows

As mentioned in our forex correlations report, the inverse correlation between the Japanese yen and the Dow Jones Industrial average remains strong. With GBP/JPY close to testing the October 24 and November 13 lows near 139.00, it seems increasingly likely that a sustained break in the Dow below the October 10 lows of 7,882 will trigger further losses for GBP/JPY. The next major level of support for the pair looms at the all time low achieved in April 1995 at 127.04, though this pair tends to respect key psychological levels, so 130.00 may provide a better target.

Source: Intellicharts

Dow Jones Industrial Average (Daily Chart)

Source: Bloomberg

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