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Next week’s Forex forecast

Sergiy Zlyvko
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Position in relation to Fed’s monetary policy after the March meeting became clear: in general, the mood of the regulator at the moment looks quite aggressive and it may soon provide moderate support for the dollar. In addition, the likelihood of stronger sanctions against Russia by the U.S. and EU are once again provoke a decline of interest in risky assets, causing dollar’s continued growth in pairs with the European currencies and consolidation of its range against the yen.

Assuming geopolitical risks, as well as the background of the financial year end in Japan (as mentioned earlier), the yen may feel confident enough. Macroeconomic statistics in this situation will have a limited impact, although there are a lot of reports scheduled for the coming week. On Thursday, at 23.30 GMT sufficiently large block of statistics from the Land of the Rising Sun will be published. Main attention is paid to consumer price index data. The decline may disturb the Bank of Japan and force it to additional monetary easing measures, which may cause short-term weakening of the yen. Also reports on unemployment and retail sales are not to be excluded from the field of view. However, data from the U.S. can call up more interest. Among them the report on orders for durable goods is particularly interesting. Also final GDP data for the four reports on consumer confidence from the Conference Board and the University of Michigan should not be excluded from the field of view. Positive statistics from the United States can strengthen the market in the idea that the Fed after the folding of quantitative easing measures (against the background of strong data it may occur slightly faster than it would be expected at the moment) and really begin to raise the rates.

Final data on business activity in the industrial and service sectors of the Eurozone and its individual regions are likely not to produce an experience for the pair. Strong revision of indicators in one direction or another can only make an exception. But the decline of business optimism IFO index in Germany, especially after the fall of economic sentiment ZEW index, may well have pressure on the euro, aiming to reduce it to the support of 1.3720. Also we should pay attention to the consumer price index in Germany. The decline will be another confirmation of dissatisfaction of Mario Draghi with euro rate.

This week will bring some interesting reports for the pairs. The first thing you should pay attention is consumer price index data. Especially important this report is made after the protocols of MPC March meeting. Several representatives of the Monetary Policy Committee raised concerns that the growth of the national currency will trigger the disinflation process and it can be an obstacle to start raising rates as scheduled, this is able to disappoint pound. In addition, retail sales data may be interesting. Assuming the stabilization of the labor market, it is possible that the rate of growth demonstrates that the pound may have moderate support.

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