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Next week’s Forex forecast

Sergiy Zlyvko
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The euro appeared quite clear benchmarks of additional stimulus and it can continue to pressure single European currency. Although the expectations of slowing folding Fed quantitative easing measures may be deterrent factor (a series of insufficiently strong report might lead to the fact that at the April meeting, the U.S. regulator would take a pause). So, next week it is worth to put an eye on published statistics very closely, although there is not so much relevant data scheduled for publication.

Next week another meeting of the Bank of Japan will be. With high probability we can assume that regulator will not change monetary policy, preferring to wait for the first results from the tax increase. However, any comments of regulator on the possible introducing additional stimulus may trigger further weakening of the yen with the ability to return a pair to the level of 104.00 resistance area with a further goal at 104.65. Also reports from the United States may impact the dynamics of the pair. It is indisputable that in light of recent comments by Janet Yellen, special attention is paid to the minutes of the last Fed meeting and speeches of the U.S. regulator official representatives (Kocherlakota, Tarullo, Evans), because all this information will assess to evaluate the prospects for exit pace from quantitative easing program.

European calendar for the current week is not plagued by significant reports. Nevertheless, some of them should pay attention because they will add clarity about the prospects of Eurozone economy. In particular, given recent comments of Weidmann, data on consumer prices in Germany should not be excluded from the field of view and in this case the index excluding prices for food and energy will be more meaningful. Its decline may exacerbate fears of further easing by the ECB, which will further pressure the euro. Also the data on trade and balance of payments in Germany is noteworthy, although it is unlikely to cause a strong reaction from the currency. However, it will evaluate how existing euro’s rate effects the state of foreign trade. Signs of weakness in the European economy could trigger attempt to test the support at the level of 1.3680 with further targeting at 1.3630.

The British pound has sufficient cause for concern. Despite the fact that on Tuesday published data on industrial production are not classified as reports of paramount importance, at this point, it could pressure British currency, provided that the indicator will show a decrease, as it will be another signal that the high rate of the pound makes its contribution to the economic slowdown. Also we should not forget about trade balance report. Monetary Policy Committee of the Bank of England meeting scheduled for Thursday’s likely will not present any surprises. It is high probability that the regulator will not make any changes. Although, if the comments sound something like Mark Carney said last week, for a short time the pound can stop the decline.

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