The USD strengthened against the Yen yesterday, as the US GDP growth rate exceeded expectations and US treasury yields rose. Analysts point out that the dollar may have gotten a clean break, after the Treasury yields rose and a robust US GDP growth rate for Q4. The USD had suffered some short dips against the JPY in the past two days as the tension between India and Pakistan rose and at the same time US President Trump and North Korean leader Kim walked from negotiations without a deal. Analysts also point out that even as the Fed has paused policy normalization, the rates differentials of the Fed with the ECB and the BoJ continue to support the USD. We could see the USD getting further support if US Treasury yields rise further, while at the same time be more data driven in the near term. USD/JPY rose yesterday and during today’s Asian session, as the pair broke above the 111.40 (S1) resistance line (now turned to support). Should the USD strengthen even further we could see the pair continuing to rise, however today’s financial releases could threaten such course. Should the pair find fresh buying orders along its path, we could see the pair aiming if not breaking the 112.55 (R1) resistance line. Should on the other hand the pair come under the selling interest of the market, we could see it breaking below the 111.40 (S1) support line and aim for the 110.15 (S2) support level.
EUR rallies for a short period as optimism grows
The common currency rallied against the USD for a short period yesterday, as hopes for further improvement of the economy increased. Analysts point out that the short Euro rally was due to growing expectations that the Eurozone may have turned a corner for the better. The EUR could remain heavily data dependent in the next few days as the pair seems to be in a crucial crossroad, which could affect ECB’s forward guidance in the coming months. We could see volatility extending for the EUR today as financial data may confirm or correct expectations for Eurozone. EUR/USD rose yesterday, breaking the 1.1385 (R1) resistance line and at some point threatening the 1.1420 (R2) resistance level, yet stabilized lower during the American session. We could see some bullish tendencies for the pair today, if the financial releases favor the common currency and at the same time weaken the USD. Should the bulls dictate the pair’s direction, we could see the pair breaking the 1.1385(R1) resistance line and aim once again for the 1.420 (R2) resistance level. Should on the other hand, the bears be holding the reigns of the pair’s direction, we could see it breaking the 1.1345 (S1) support line and aim for lower grounds.
Today’s other economic highlights
During the European session today, we get Germany’s final Mfg PMI for February, Germany’s unemployment data for February, UK’s manufacturing PMI for February and Eurozone’s preliminary CPI rate for February as well as Eurozone’s unemployment rate for January. In the American session from the US we get the consumption rate for December, the core PCE Price Index for December, the ISM manufacturing PMI for February, the final Michigan Consumer Sentiment for February, while from Canada the GDP growth rate for Q4. As for speakers, please note that Atlanta Fed president Raphael Bostic speaks.
USD/JPY
Support: 111.40 (S1), 110.15 (S2), 109.20 (S3)
Resistance: 1112.55 (R1), 113.70 (R2), 114.50 (R3)
EUR/USD H4
Support: 1.1345 (S1), 1.1300 (S2), 1.1260 (S3)
Resistance: 1.1385 (R1), 1.1420 (R2), 1.1460 (R3)
