US Core PCE rates due out today, with the BOJ interest rate decision due out tomorrow.

The BOJ’s interest rate decision is set to occur during tomorrow’s Asian session. The majority of market participants are currently anticipating the bank to remain on hold at 0.5%, with JPY OIS currently implying a 96.89% probability for such a scenario to materialize. Therefore, our attention turns to the banks accompanying statement in which should it be implied that the bank may continue on their rate hiking cycle, it may aid the JPY and vice versa. In our view, we would not be surprised to see the bank implying that the global economic outlook remains unstable as a result of the trade wars induced by the US. In the US the Core PCE rates for March are set to be released during today’s American session. The Core PCE rates are the Fed’s favourite tool for measuring inflationary pressures in the US economy. Therefore, with economists currently anticipating the rate to showcase easing inflationary pressures by coming in at 2.6% which would be lower than the prior rate of 2.8%, it may increase pressure on the Fed to adopt a more dovish tone. Thus such a scenario could potentially weigh on the greenback, whereas should the Core PCE rates showcase persistent or event an acceleration of inflationary pressures it may have the opposite effect. In Europe, the releases of Germany’s preliminary HICP rate for April and the Eurozone’s preliminary GDP rate for Q1 could potentially weigh on the EUR respectively, should they come in as expected.

EUR/USD appears to be moving in a predominantly upwards trajectory, however, we continue to maintain our belief that the pair may aim for lower ground in the short term. Nonetheless, we still opt for a predominantly bullish outlook, and supporting our case is the RSI indicator below our chart, which currently registers a figure close to 60, implying a bullish market sentiment. Yet the MACD indicator below our chart tends to contradict our aforementioned view. Nevertheless, for our bullish outlook to continue, we would require a clear break above our 1.1470 (R1) resistance line with the next possible target for the bulls being the 1.1685 (R2) resistance level. On the other hand, for a sideways bias we would require the pair to remain confined between the 1.1185 (S1) support level and the 1.1470 (R1) resistance line. Lastly, for a bearish outlook we would require a clear break below the 1.1185 (S1) support level, with the next possible target for the bears being the 1.0950 (S2) support line.

USD/JPY appears to be moving in a predominantly downwards direction, yet we would opt for a sideways bias for the pair in the short term. Our sideways bias for the pair and supporting our case is pair remains above our 141.75 (S1) support level, in addition to the MACD indicator below our chart. Yet the RSI indicator remaining close to 40 may imply bearish market tendencies. Nonetheless, for our sideways bias to be maintained we would require the pair to remain confined between the 141.75 (S1) support level and the 144.55 (R1) resistance line. On the flip side for a bearish outlook we would require a clear break below the 141.75 (S1) support line with the next possible target for the bears being the 139.60 (S2) support level. Lastly, for a bullish outlook we would require a clear break above the 144.55 (R1) resistance line with the next possible target for the bulls being the 147.40 (R2) resistance level.

Other highlights for the day:

Today we get the UK’s nationwide house prices rate, France’s preliminary HICP and Switzerland’s KOF indicator figure all for the month of April, followed by the Czech Republic’s preliminary GDP rate for Q1, Germany’s preliminary GDP rate for Q1, the Eurozone’s preliminary HICP rate for Q1 and Germany’s preliminary HICP rate for April. In the American session, we note the US ADP Employment figure for April, the US’s GDP advance rate for Q1, Canada’s GDP rate for February and the US Core PCE rates for March followed by the release of the BoC’s April meeting minutes. In tomorrow’s Asian session we note Australia’s final manufacturing PMI figure for April, Japan’s final Jibunk manufacturing PMI figure for April and we highlight the BOJ’s interest rate decision

EUR/USD  Daily Chart

• Support: 1.1185 (S1), 1.0950 (S2), 1.0740 (S3)
• Resistance: 1.1470  (R1), 1.1685 (R2), 1.1890 (R3)

USD/JPY Daily Chart

• Support: 141.75 (S1), 139.60 (S2), 137.25 (S3)
• Resistance: 144.55 (R1), 147.40 (R2), 149.80 (R3)

If you have any general queries or comments relating to this article please send an email directly to our Research team at research_team@ironfx.com

Disclaimer:
This information is not considered as investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.

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