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BoJ keeps policy steady; FOMC minutes closely watched

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The dollar regained ground against the euro despite the absence of market-affecting news for the currency, covering Friday’s losses occurred by the disappointed NFP report. Furthermore, the greenback regained ground against its G10 currencies with the NOK and SEK being the biggest losers falling during Asia trading.

The shared currency plunged below the key support level of 1.0920 after the failed attempt to break above the strong resistance level of 1.1040. On the economic front, the news out of Eurozone was actually encouraging. Eurozone’s PPI, the change in prices received my domestic producers of commodities, improved to -2.8% after four consecutive months of decline. The German Markit Services and Composite PMIs for March came both slightly above expectations in contrast to the Eurozone peer indicators that came slightly below than anticipated.

The pound saw a temporary downward correction against the dollar during mid-day trading yesterday, in the absence of any material economic events. The GBPUSD pair fell below the key support level of 1.4870, which includes the 50-period SMA on the 4-hour chart and is now finding temporary support slightly below the psychological level of 1.4800. All eyes in the remaining week will be on the BoE Interest Rate decision scheduled for Thursday, as well as the money the Central Bank will inject in the economy by open market bonds purchases.

Early in the morning, Bank of Japan published its policy statement, keeping its policy unchanged. The BoJ, two years ago started a stimulus program to buy government bonds and risky assets to boost the economy. Nowadays, the central bank, optimistic of the outlook of the economy, maintained its policy to increase the cash money out at an annual pace of $670 billion through the program. The USDJPY pair remains stuck in a range – daily chart – since the beginning of 2014. If we switch to a lower timeframe, the Japanese yen attempted to break above the 120.15 but without any success as it failed to hold above it, recording another false break in the last week above that barrier. Also, the 118.00 level is very important as a big round number defended by the big players as a strong barrier. Therefore, I will remain bullish as far as the pair is trading above that psychological level.

The Australian dollar remained strong against the US dollar after the Reserve Bank of Australia left interest rates on hold for the second month in a row at 2.25%. The AUDUSD is trading above the key support level of 0.7640 and if the bulls manage to maintain the price above that level then it could retest the 0.7700, which coincides with the 200-period SMA on the 4-hour chart.

In other news, the Fed released yesterday the Consumer Credit Change which increased to $15.52B from $10.80B before, which is positive for the dollar. JOLTS Job Openings have increased in February more than anticipated. IBD/TIPP Economic Optimism, a monthly survey, showed that the US consumers are more optimistic about the economy in May that in April.

Economic Indicators

The spotlight of the day is the release of the FOMC minutes from Fed. The Fed dropped the word “patient” for an upcoming rate hike, but the soft NFP report released on Friday confused the market. Thereby, we hope the upcoming minutes will give us a clearer picture of what to expect.
In Germany Factory Orders seasonally adjusted in January, on a monthly basis, are expected to show a steeper pace for March of 1.5% than -3.9% before.

The Eurozone’s Retail Sales for March are estimated to have been -0.2% mom, turning negative after four consecutive months of being positive.

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