A brief outlook on major currencies

News summary

Governor Stephen Poloz declared before a parliamentary committee. Poloz was cautiously optimistic about economic conditions. He said that he expected the economy to be improved after a disappointing first quarter that inflation would push above BoC’s target of 2% later in 2018. The bank maintained the rate at 1.25% last week but is expected to raise rates in May. Policymakers would like to see the NAFTA negotiations’ outcome before making any rate moves. The talks have made significant progress, raising hopes that it will be announced an agreement soon.

Steady growth in the U.S and rising inflation expectations should have further gains in the dollar as investors are convinced that the Federal Reserve will use the May meeting to prepare the market for a June hike. Every U.S. policymaker who has spoken this month was in favour of more hawkish.

The latest economic data released show inflation pressures are rising and will lead the Federal Reserve to raise rates maybe four times this year, economists said.

as investors are heavily expected for hawkishness.

Economists disused predictions that the Bank of England will increase interest rates next month after two weeks of disappointing data and the doubts of Mark Carney following a weak first-quarter GDP report on Friday.

The European Central Bank and the Bank of England have studied the threats that Brexit causes to financial services.

The Bank of Japan left all its monetary policy settings on hold as had been universally assumed.

At a press conference a month or two back, Bank of Japan Governor Haruhiko Kuroda linked the end of Qualitative and Quantitative Easing (QQE) and the BoJ achieving its 2% inflation target sometime in 2019.

The Swiss franc remains highly valued. Inflation remains low. In this environment, the Swiss National Bank (SNB) is continuing t its expansionary monetary policy

 

EUR/JPY

On the 4 hour chart, the price has rebounded from the resistance 133.2 which is the same level of the 50% Fibonacci. There are many indicators that the pair is moving through, and bears are adding up. The price formed a reversal pattern (wedge), followed by breaking a lower trend line.

The price has shaped recently pin bar along with engulfing candle to enhance the bearish bias. So, it is expected to go down to 131.25 level

 

GBP/CHF

On the 4-hour chart, the price has shaped a double top reversal pattern bouncing from key resistance 1.3825. The price has, then, rebounded from the broken up channel, followed by breaking the upper trend line. A harmonic pattern (AB=CD) has boosted the downward possibility

In addition looking at a divergence in RSI, the price is presumed to go down to 1.3485 level

 

NZD/USD

On the 4-hour chart, we can see a strong bearish momentum until some walls appeared, to stand against them a little bit. The price has reached the support 0.7035 which is the same level of 61.8% Fibonacci. A lower trend line had been broken recently, which provides a little correction on the way. Looking at the divergence in RSI, the price is expected to retest 0.7155 level

 

EUR/GBP

On the daily chart, the price is moving sideways for the last six months

The pair had a false break down at the key support level 0.867, to get back up again with well price action (engulfing candle). The price has recently broken a downward channel which is considered a continuation pattern too. With divergence in RSI, the price is supposed to continue its sideways movement to reach 0.893

©Forex.Academy