EUR/USD: Will the ECB surprise the markets?
(Vasilis Tsaprounis – TopFX)
With great interest the markets await later in the noon Europe time the meeting of the European Central Bank and the statements of President Lagarde.
Absolutely expected It is a decision to increase by 25 basis points while in the last few days the bets for an increase of 50 points have increased.
The increase of probability for a 50 basis point hike was one of the main reasons for the strong reaction for the common European currency in recent days.
While the positive climate that temporarily returned to the International stock markets helped in turn the temporary upward movement of the euro. Nevertheless, as we noted in the last report, the duration and intensity were limited.
In view of the important today’s decision it would be very difficult to continue the upward momentum of the pair and break upward critical levels like that of 1,0280-1.0300.
The positive sentiment in international stock markets has returned in recent days as messages that natural gas flows will resume after the temporary interruption were encouraging. However the picture remains cloudy, the flow has not been restored to 100% and the environment for new pressures may be created.
We would seen it very difficult for the European central bank to surprise the markets by announcing a 50-point increase.
We believe that the base scenario for 25 basis point increase in key interest rates is what will be announced and unless there is some surprise from president Lagarde’s comments the euro could hardly continue its strong upward momentum at this stage.
Daily technical and trading outlook – USD/JPY
Trend daily chart
21 HR EMA
55 HR EMA
Trend hourly chart
13 HR RSI
14 HR DMI
Consolidation with upside bias.
139.39 – Last Thur’s fresh 24-year high.
139.12 – Last Fri’s high (AUS).
138.61 – Prev. hourly sup (now res).
137.90 – Mon’s low.
137.75 – Last Mon’s high (now sup).
137.39 – Tue’s low.
USD/JPY – 138.42.. Although dlr extended Tue’s gain fm 137.39 to 138.24 to 138.37 initially in Asia, price ratcheted loower to 137.91 on cross buying in yen b4 edging higher due to rally in US yields to 138.30 in late NY session.
On the bigger picture, dlr’s spectacular rally fm 2011 historic low at 75. 32 (Mar) due to co-ordinated CCY intervention by G7 central banks to weaken the yen in the aftermath of Japan’s earthquake and tsunami of Mar 2011 to as high as 125.86 (2015) confirms major low has been made. Although the pair fell back to 99 .00 in mid-2016 n swung broadly sideways until 2021, price rallied in tandem with U.S. yields n U.S. stocks on risk sentiment to a 20-year peak of 131.34 in May 20 22 confirms LT uptrend has resumed. Dlr’s gain to a 24-year peak of 139.39 last week would head to 140.00, ‘bearish divergences’ should cap price below 141.31 n yield decline. Only below 136.49 risks correction twd 134.75 later this month.
Today, dlr’s strg bounce fm 137.39 to 138.37, then 138.49 at Tokyo open suggests 1st leg of correction fm last Thur’s fersh 24-year peak at 139.39 has ended n rising hourly indicators would send price to 138.44, break would encourage for gain to 138.65 (61.8% r), reckon 139.12 would hold. Below 137.75
Rates day for Eurozone and Japan [Video]
(Tomasz Wisniewski – Axiory Global Ltd.)
In today’s Traders Edge Market Briefing, Tomasz found these unique setups that we thought you’d find interesting.
The Bank of Japan (BoJ) did not change rates but it changed its outlook on the inflation, which is about to get bigger than originally anticipated.
We are about to get the first Eurozone rate hike in Eurozone in 11 years. Greater volatility is expected on Euro pairs.
Gold reached an ultimate long-term support, which may be a great occasion to start a bullish correction.
The USDCAD still inside of a very promising bearish setup involving the 38,2% Fibonacci and a giant wedge formation.
The USDJPY climbed higher after comments from the BoJ and a bounce from the long-term up trendline.
The AUDJPY bounced off the long-term up trendline, the horizontal support is at 95.
Major indices broke their closest mid-term resistances, which sets the bullish tone for the nearest future.