After the meeting of the Bank of Japan, the JPY dynamic confirms the main points of it. The current form of monetary policy is really bearing fruit: macroeconomic indicators are improving, and market participants expect positive results from data on retail sales and industrial production.
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Since the beginning of the year, the EUR/USD pair has been under strong pressure from a number of factors, reaching the November lows of last year near 1.1000. The main reason for the decline is the continued strengthening of USD against most major currencies. Today, investors wait for the Fed's Interest Rate Decision. During this month, there were opinions regarding a possible easing of monetary policy, however, the current high positions of the national currency indicate the opposite, and the rate is likely to stay the same.
Today, during the Asian session, the USD/CAD pair is growing slightly, being corrected after yesterday’s active decline, as a result of which the dollar retreated from its local highs from December 11, 2019. Yesterday, USD was under pressure of poor US Durable Goods Orders data.
The pair may fall.
On the daily chart, the third wave of the higher level 3 of (3) develops, within which the wave i of 3 forms. Now, a local correction is developing as the fourth wave (iv) of i. If the assumption is correct, after the end of the correction, the pair will fall to the levels of 0.9550–0.9500. In this scenario, critical stop loss level is 0.9818.
The pair may fall.
On the daily chart, the fifth wave of the higher level (5) develops, within which the wave 5 of (5) forms. Now, an upward correction has ended as the fourth wave of the lower level iv of 5, and the wave v of 5 is forming. If the assumption is correct, the pair will fall to the levels of 0.6663–0.6545. In this scenario, critical stop loss level is 0.6935.
At 09:00 (GMT+2), German data on the consumer climate index Gfk for February will be published. The indicator measures the degree of consumer confidence in the strength of the economy and is a leading indicator for consumer spending. The value is expected to remain unchanged at 9.6 points.
At 02:30 (GMT+2), Australian Q4 data on the consumer price index will be released. It is the main indicator of inflation in the country, which determines the change in the level of retail prices for a certain “basket” of goods and services: food, transportation, utilities, health care and so on. It has a significant impact on monetary policy decisions. It is expected that the consumer price index on an annualized basis will remain at the same level of 1.7%, and on a monthly basis will grow from 0.5% to 0.6%. Realization of the forecast may support the Australian dollar.
A weekly report on the volume of oil reserves in the USA from API is due at 23:30 (GMT+2). The figure shows how much oil and refined products are available in storage. The reduction in reserves traditionally leads to an increase in oil quotes, and an increase in the indicator leads to a decrease in prices for “black gold”. Last week, US oil inventories rose by 1,600 million barrels. If this trend persists, it may put pressure on oil prices.
January Consumer Confidence index by Conference Board will be released in the USA at 17:00 (GMT+2). It is based on a survey of 5000 American households and takes into account their vision of the current and future economic situation. This is a leading indicator that predicts consumer spending that is part of economic activity. High rates indicate consumer optimism. The index is expected to grow from 126.5 to 128.0 points. If the forecast proves to be true, this may render support to the US currency.
December data on Durable Goods Orders in the US are due at 15:30 (GMT+2). Durable goods are those whose service life is more than three years. It is a leading indicator of industrial activity. It is expected that the total volume of orders will increase by 0.5% after a decrease of 2.1% a month earlier. Core Durable Goods Orders (excluding transportation items) can grow by 0.2% after a decrease of 0.1% in November. If the forecast proves to be true, this may render support to USD.