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Next week’s Forex forecast

Sergiy Zlyvko
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The coming week promises to be very interesting in terms of macroeconomic statistics published for all currencies. Reserve Bank of Australia and the ECB will announce decisions on monetary policy. U.S. is going to publish Non-farm payrolls data. Despite the fact that currently, the U.S. Federal Reserve abolished landmark in the form of unemployment and now when deciding on monetary policy the regulator will pay attention to a wide range of data rate remains significant.

The increase on April 1 sales tax from 5% to 8% will be the key event for the yen this week. Last time such measures the government has taken 17 years ago and then USDJPY pair for 5 months lost about 9.5%. It seems clear that in response to increased tax burden, the reducing for domestic consumption and, consequently, the economic slowdown are expected. In such circumstances, the Bank of Japan will be forced to do another increase in stimulus measures. Thus, we do not exclude the movement of the pair to 104.00 resistance area provided that quotes will foothold above 102.70. In light of this, quarterly report Tankan can remain without proper attention, which reflects business conditions for large manufacturing companies in Japan. Data from the U.S. can make an adjustments to the dynamics of the pair. Among it, in addition to the report on non-farm employment the data on business activity in the manufacturing sector and the service sector (which is more important for the U.S. economy, as it is, it is about 70%), a report on changes in the number of employees from ADP should be interesting for investors. Provided that the statistics from the United States will not give cause for disappointment, the growth of the pair can only accelerate.

The key event for the euro will be the publication on April 3 ECB’s monetary policy and the following comments from Mario Draghi. Recently, the single European currency has come under pressure by statements of officials that they were not satisfied with current high rate bearing deflationary risks. To the voice of ECB head, the head of the Bundesbank joined. However, in his comments, he made the emphasis on how to combat this process, hinting at the possibility of negative rates using. Of course, now that the market is expecting a new wave of verbal interventions. All this may continue to push on the euro, pushing the pair to 1.3630 level.

For British currency coming week may be a little less interesting from planned statistics point of view. Although it is not necessary to exclude from the field of view the data on business activity in the industrial and construction sectors, as well as the services sector. If the figures will remain in the previously reached levels and not show a sharp decline, the pound should get another batch of positive and continue to move to 1.6710 resistance area, as it would indicate that the economy of the country feels confident enough. And, therefore, the Bank of England has not special reasons to postpone the start of a possible monetary policy tightening.

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