Dollar was unmoved by the hawkish FOMC minutes released overnight and struggles to extend gain. EUR/USD’s break of 1.0520 minor support yesterday is seen as a sign of decline resumption. However, GBP/USD, USD/JPY, USD/CAD and AUD/USD are all held in established range. Similarly, the dollar index lost momentum ahead of near term resistance level at 101.76. The move in EUR/USD was more due to weakness in the common currency in general, due to political uncertainties. In other markets, DJIA closed at new record high at 20775.60, up 0.16%. But S&P 500 and NASDAQ closed slightly down by -0.11% and -0.09% respectively. 10 year yield continue to gyrate in sideway consolidation pattern and closed down -0.009 at 2.418. Gold and oil are both staying in tight range.

FOMC Signaled Rate Hike To Come ‘Fairly Soon’

Although the FOMC minutes for the January meeting appeared to be a hawkish one, it failed to lifted speculations of a March rate hike. As suggested in the minutes, many members judged that would be "appropriate" to increase interest rate again "fairly soon". A few of them suggested removing policy accommodation in "a timely manner". However, there was no indication that it should arrive in as soon as March. Meanwhile, the minutes noted that "a few" members remained concerned about downside risks to the inflation outlook.

As US President Donald Trump has yet to announce his fiscal expansion plan, the FOMC members emphasized their "considerable uncertainty" about possible changes in "fiscal and other government policies" as well as "about the timing and magnitude of the net effects of such changes on economic activity". The members indicated that "the possibility of more expansionary fiscal policy as having increased the upside risks to their economic forecasts". Some, however, suggested that "several potential changes in government policies could pose downside risks". Such uncertainty has indeed diminished prospect for a March rate hike. More in FOMC Signaled Rate Hike To Come ‘Fairly Soon’

US to release jobless claims

Elsewhere, Japan corporate service price index rose 0.5% yoy in January. Australia private capital expenditure dropped -2.1% in Q4. German GDP was finalized at 0.4% qoq in Q4. German Gfk consumer sentiment dropped to 10.0 in March. US initial jobless claims will be the main focus of the day. House price index will also be featured.

USD/JPY Daily Outlook

Daily Pivots: (S1) 112.90; (P) 113.31; (R1) 113.72; More…

USD/JPY is staying in range of 111.58/114.94 and intraday bias remains neutral for the moment. Corrective fall from 118.65 could extend lower through 111.58. But we’d still expect strong support from 38.2% retracement of 98.97 to 118.65 at 111.13 to contain downside and bring rebound. On the upside, above 114.94 resistance should confirm completion of pull back from 118.65. In such case, intraday bias will be turned back to the upside for retesting 118.65.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

Economic Indicators Update