It looks like we’ve broken through the first key technical hurdle for USD/JPY on the way down, as sellers are firmly pushing price below the 100-day moving average (red line) of 147.70 today. The hawkish murmurs surrounding the BOJ continue to grow, as it seems like policymakers are teeing up a move in two weeks‘ time.

The spring wage negotiations is the key factor in play at the moment and we are likely to see some news on that on 13 March next week. That will come before the BOJ meeting on 19 March, leaving some room for policymakers to deliberate ending negative rates as early as this month.

And so, the yen is continuing to run higher as such after the BOJ got the ball rolling earlier this week.

USD/JPY is now down to 147.10 and may look to dip much further from here. The 38.2 Fib retracement level offers some minor support at 146.82 next. But I’m watching the 1 February low near 146.00 and the 200-day moving average (blue line) at 146.15 as the next big support region for the pair.

This article was written by Justin Low at www.forexlive.com.

USD

• The Fed left interest rates unchanged as
  expected at the last meeting and dropped the tightening bias in the statement.
• The US PCE came
  in line with expectations.
• The US ADP and
  the US Job Openings missed
  expectations.
• The latest US ISM
  Manufacturing PMI missed expectations by a big margin
  remaining in contraction with the US ISM Services
  PMI
  following suit but holding on in expansion.
• The US Consumer
  Confidence missed expectations across the board.
• The market expects the first rate cut in June.

EUR

• The ECB left interest rates unchanged as
  expected at the last meeting maintaining the usual data dependent language.
• The Eurozone CPI beat
  expectations.
• The labour market remains historically
  tight with the unemployment rate hovering at record lows.
• The latest Eurozone PMIs beat
  expectations on the Services side with the measure jumping back into expansion
  while the Manufacturing one missed dragged lower by Germany’s performance.
• The market expects the ECB to cut rates in June.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that EURUSD probed
above the 1.09 handle yesterday but failed to sustain the breakout as the
sellers stepped in with a defined risk above it to position for a drop into the
1.0723 support. The
trend for now remains bullish as the price continues to make higher highs and
higher lows with the moving averages being
crossed to the upside. The buyers will want to see the price breaking higher to
invalidate the bearish setup and start targeting the 1.10 handle.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective, the buyers will have a much better risk to reward setup
around the trendline where
they will also find the confluence of the
61.8% Fibonacci retracement level
and the daily 21 moving average. The sellers, on the other hand, will want to
see the price breaking below the trendline to invalidate the bullish setup and
increase the bearish bets into the 1.0723 support.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
buyers have another strong support zone around the 1.0870 where we can find the
confluence of the previous resistance turned
support, the minor trendline, the 61.8% Fibonacci retracement
level and the 4-hour 21 moving average. This is where we can expect the buyers
to step in with a defined risk below the trendline to position for a break
above the 1.09 level and target the 1.10 handle. The sellers, on the other
hand, will want to see the price breaking lower to invalidate this bullish
setup and position for a drop into the major trendline.

Upcoming Events

Today we have the ECB rate decision and the US
Jobless Claims figures, while tomorrow we conclude the week with the US NFP
report.

This article was written by FL Contributors at www.forexlive.com.

The ECB policy meeting decision later is going to be a dud. There’s almost no doubts about that really. The central bank is not in a position to cut rates just yet and so, they can’t really force such a communication in their policy statement in case inflation developments don’t go according to plan in the months ahead. The key rhetoric now is better be safe than sorry.

And that is precisely what we should see in the monetary policy statement later in the day. The ECB should adhere to the following passage:

„Based on its current assessment, the Governing Council considers that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal. The Governing Council’s future decisions will ensure that its policy rates will be set at sufficiently restrictive levels for as long as necessary.“

Adding to that, the statement should reaffirm a more „data-dependent approach“ as they continue to take stock of economic data over the next few months.

I mean, the ECB has made that quite clear since the start of the year. They have guided markets into pricing out rate cuts in March and April. And they have communicated that they are quite comfortable with traders pricing in the first rate cut for June at the moment.

That of course might change if we do get some surprises in the next two months. But as of today, they are happy with how things have panned out for the time being.

So, what is there to really talk about today?

I think that is exactly the point. The statement should offer nothing for markets to scrutinise. So, all the focus and attention will turn towards Lagarde’s press conference instead.

The main thing that she wants and needs to achieve is to maintain the status quo.

As traders are looking to June for the first rate cut, that is where the ECB is also comfortable with considering recent economic developments. As such, there is no need to deviate from that.

That should make Lagarde’s job relatively simple, no? Well, yes and no.

On the one hand, all she has to do is rehash everything that they have been saying over the last two months. However, if she accidentally let slip any commentary about earlier rate cuts, that will change the whole picture.

The latter might happen as she might feel the need to be more explicit about the ECB’s motives in the months ahead. They have made clear that the next step is likely a rate cut. So, the onus is on Lagarde to build upon that but not too much.

If she does her job well, the events today should be a non-event for the euro and the rates market. And if we do get some outsized reaction otherwise, it would be clear that she definitely bottled the moment.

This article was written by Justin Low at www.forexlive.com.

It is still early in the day with the ECB and US weekly jobless claims coming up. Those events are not likely to offer much but US futures are already showing slight optimism by brushing aside the losses earlier in the session. S&P 500 futures were down as much as 0.4% but are flat on the day currently.

It reaffirms that dip buyers are still seen in the market following the drop on Tuesday this week. Nvidia is continuing to play a big part in that with price closing in on $900 in pre-market. The parabolic run higher in the stock continues to buoy overall sentiment it would seem.

This article was written by Justin Low at www.forexlive.com.

• Firms reported that their output prices rose by an average annual rate of 5.4% in the three months to February (down from 5.6% previously)
• Year-ahead own-price inflation was expected to be 4.3% in the three months to February (unchanged)
• Output price inflation is expected to decline by 1.1% over the next 12 months
• One-year ahead CPI inflation expectations declined to 3.3% (down from 3.4% previously)
• Three-year ahead CPI inflation expectations fell to 2.8% (down from 2.9% previously)
• Expected year-ahead wage growth seen at 5.2% on a three-month-moving-average basis (unchanged)
• Annual wage growth fell to 6.7% in the three months to February (down from 6.8% previously)

Looking at it as a whole, it just reflects some light moderation in price pressures. The good news at least is that prices aren’t really intensifying on the business end. However, how that translates to consumer prices at the end of the day is another debate really. It’s much easier said than done as companies have to watch out for their bottom line. Greed much.

This article was written by Justin Low at www.forexlive.com.

Yesterday,
the S&P 500 finished the day negative as some weak US data started to weigh
a bit on sentiment. The ISM PMIs recently missed expectations with notably the
employment indexes showing contraction. The ADP
yesterday missed forecasts and the Job
Openings were lower than expected with negative revisions to the prior figures.
Moreover, we had Fed Chair
Powell testifying to Congress, but he basically reaffirmed their patient
approach stressing that the timing for rate cuts will be determined by the
incoming data.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
bounced around the trendline where we
had also the confluence with the
red 21 moving average and the
previous resistance turned support. This is
where the buyers stepped in with a defined risk below the trendline to position
for a rally into new highs. The sellers, on the other hand, will want to see
the price breaking lower to invalidate the bullish setup and position for a
drop into the next support at 4946.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we
had also the confluence of the 50% Fibonacci
retracement level at the 5048 support. The divergence with
the MACD has
been going on for a long time and it’s generally a sign of weakening momentum
often followed by pullbacks or reversals. In this case, it’s been signalling
pullbacks to the previous swing levels where we continuously found dip-buyers.
A break below the trendline would confirm a reversal and we could even see a
selloff into the 4700 next.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
latest leg higher diverged with the MACD and led to a pullback into the support
zone around the 5048 level. The buyers piled in with a defined risk below the
trendline to target new highs. If the price were to fall back into the support,
we can expect the buyers to defend the level again as a break below it would
likely trigger a selloff into new lows.

Upcoming Events

Today we get the latest US Jobless Claims figures,
while tomorrow we conclude the week with the US NFP report.

This article was written by FL Contributors at www.forexlive.com.

GBP

• The BoE left interest rates unchanged as expected at the last meeting
  removing the tightening bias but reaffirming that they will keep rates high for
  sufficiently long to return to the 2% target.
• The employment report beat expectations across the board
  with a positive revision to the December’s negative payroll figure.
• The UK CPI missed expectations across the board but with
  Services inflation remaining sticky, which continues to support the BoE’s
  patient stance.
• The latest UK PMIs improved from the prior month with the
  Services PMI beating expectations and the Manufacturing PMI missing.
• The market expects the first rate
  cut in June.

JPY

• The BoJ kept its monetary policy unchanged as expected at the last meeting
  with interest rates at -0.10% and the 10 year JGB yield target at 0% with 1% as
  a reference cap.
• The Japanese CPI beat expectations although all
  measures eased further from the prior readings.
• The latest Unemployment Rate remained unchanged hovering around
  cycle lows.
• The Japanese PMIs improved for both the Manufacturing
  and Services measures although the former remains in contractionary territory.
• The Japanese wage data missed expectations although there
  was a pick up from the prior reading.
• The Tokyo CPI, which is seen as a leading
  indicator for National CPI, came in line with expectations.
• The market expects the BoJ to hike
  rates in Q2.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY recently
couldn’t break above the high on the second try. We can also notice that the
price has been diverging with the
MACD for
quite some time. This is generally a sign of weakening momentum often followed
by pullbacks or reversals. In this case, the buyers leant on the red 21 moving average to keep
pushing into the high targeting a breakout. The sellers, on the other hand,
will need the price to break below the moving average to turn the trend around
and start targeting the 185.21 level.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a strong
support zone around the 190.35 level where we can also find the confluence with red
21 moving average and the 38.2% Fibonacci retracement level. This
morning we got a spike to the downside caused by a report saying
that some BoJ policymakers will likely say at the upcoming meeting that lifting
negative interest rates will be reasonable. Nevertheless, this is where we can
expect the buyers to step in with a defined risk below the level to position
for a break above the cycle high with a better risk to reward setup. The
sellers, on the other hand, will want to see the price breaking lower again to
position for a drop into the 186.67 level.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the bullish setup around the 190.35 level. If the price breaks above
the recent swing low at 190.67, then we can expect the buyers to increase the
bullish bets as it would be a confirmation for further higher highs to follow.

Upcoming Events

Today we have the US ADP, the US Job Openings and
the Fed Chair Powell speaking. Tomorrow, we get the latest US Jobless Claims
figures, while on Friday we conclude the week with the US NFP report.

This article was written by FL Contributors at www.forexlive.com.

EUR/USD strengthened during the European session as the USD lost ground after lower than expected ISM data. The pair is heading towards the 1.0915 level of resistance.

Powell will likely reiterate in his Congress testimony today that there’s no rush for the Fed to cut rates and more evidence is needed to confirm that the downward inflation trend is persistent. The market has already accounted for this and will not react unless there’s a surprise.

As such, a bigger focus will be on tomorrow’s ECB meeting. The market expects rate cuts to begin in June, but analysts anticipate that the ECB will have a dovish tone. If confirmed, EUR/USD will lose strength.

AUD/USD strengthened as well during the European session despite mixed GDP data from Australia and is currently trading near the 0.6520 support level.

NZD/USD lacks clear direction and consolidates at 0.6100.

USD/CAD is awaiting the BoC monetary policy announcement today and the labor market data on Friday which could influence the pair’s direction. A special attention for today’s meeting will be on whether the BoC hints at rate cuts. If so, the CAD will soften.

USD/JPY dropped sharply after a report that some BoJ policymakers are considering a first rate hike in March, but didn’t break the 149.30 level of support. The fact that officials have differing views on rate hike timing didn’t help the pair.

This article was written by Gina Constantin at www.forexlive.com.

Well, it was inevitable after Trump dominated the primary election on the Republican end. She managed to snag Vermont from Trump but that’s about it really. That means we are set to see this showdown once again:

This article was written by Justin Low at www.forexlive.com.

The March poll of 40 foreign exchange analysts shows that the median forecast was for USD/CAD to fall to 1.34 in three months‘ time. In a year’s time, the pair is expected to fall to 1.30 – matching the estimate in the February poll. The expected drop comes as some analysts are forecasting a broader decline in the US dollar this year.

„The gradual decline in USD/CAD certainly in part reflects a slowing US economy and the Fed embarking on a rate cutting cycle. We also assume no hard landing and if risk remains broadly favourable this year that should also benefit CAD.“ — MUFG global markets EMEA head of research, Derek Halpenny

In case you missed it, Adam also had some insights on the loonie at the end of last month: Video: I’ve never been so bearish on the Canadian dollar

This article was written by Justin Low at www.forexlive.com.