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Next week’s Forex forecast

Sergiy Zlyvko
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Minutes of the last Fed meeting only confirmed what was clear from earlier performances of Yellen: reduction of quantitative easing (QE3) will continue until the likely pace it will remain unchanged, even despite the fact that some members of the Committee saw an opportunity to raise rates shortly. Making decisions about monetary tightening many macroeconomic indicators are important.

Coming week will bring a lot of interesting reports that can become catalysts movements. As always, statistics from the U.S. will has a greatest impact on USDJPY currency pair: data on consumer confidence, a report on new home sales, data on orders for durable goods (27 February), Q4 GDP. Any signals to the fact that the U.S. economy is quite stable can support the pair, prompting another test of resistance towards 102.70 and 103.60. On Thursday, from 23:15 to 23:50 GMT Japan will publish fairly large block of statistics. It focused on data on the consumer price index. Provided that the CPI drops, the yen could fall under additional pressure as it would be a signal of the fact that the Bank of Japan will keep ultra-soft monetary policy for a long time and possibly even go for additional stimulus measures.

The week will be full in the fundamental terms for the single European currency. IFO studies, CPI of E17, the final German GDP in the 4th quarter, the data on the labor market and retail sales in the Eurozone to publish next week. Given the doubts that lately is the state of the European economy, reports will be very interesting, especially on the eve of the March ECB meeting. Provided that the data can still dispel these doubts, EURUSD (especially in the case of weak enough statistics from the U.S.) may attempt to break above the 1.3780 level, aiming for maximum movement for December (1.3890). Otherwise the movement to the area 1.3680 and further 1.3630 is possible.

There are not many significant reports in the British calendar, so the pair can be influenced by market sentiment. Nevertheless, it should not be excluded from the field of view the second reading of Q4 GDP on Wednesday, February 26. Of course, the reaction to the data is expected in case of deviation from the preliminary figures. If they are revised downward, the British currency will continue to decline to the level of 1.6540. But if further statistics from the U.S. will be quite weak, it will be able to recover the loss.

Economic calendar on Monday doesn’t abound a large number of significant reports. Therefore, we can assume that most of the major pairs hold within narrow range, preparing for the publication of important data.

However, the single European currency will excuse jittery. Index of business optimism from Germany IFO publication will be under attention. Constant level is projected. But if it will reflect the deterioration in business sentiment sector of the country, the pan-European currency may come under pressure, moving to the support area at 1.3700 Also we should not forget about the report on the consumer price index of E17.

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