A dearth of economic data on Monday will keep many traders on the sidelines in anticipation of more worthwhile events later in the week.
Bank of Japan (BOJ) Governor Haruhiko Kuroda is the only noteworthy headline on Monday. Kuroda will be covering “Current Issues of Monetary Policy” at the University of Zurich. The speech is scheduled to occur at 17:45 GMT.
The BOJ has maintained a highly accommodative policy stance under the guidance of Kuroda and Prime Minister Shinzo Abe, who recently secured another full term in office. Abe’s “three arrows” of fiscal stimulus, loose monetary policy and structure reform appear to be paying off. The Japanese economy has expanded for six straight quarters, which is the longest stretch of uninterrupted growth in more than a decade.
In terms of economic data, a report on Japanese machine tool orders was also under consideration early Monday.
No major European releases made headlines.
In the United States, the Financial Management Service will issue its monthly budget statement for October. The monthly report, which summarizes the financial activities of federal entities, is expected to show a deficit of $50 billion. The budget statement showed a surplus of $8 billion the month before.
All eyes will be on the US dollar this week after the currency fell from three-month highs. The US dollar index (DXY), which tracks the greenback’s performance against a basket of six currencies, rose 0.2% to 94.53 on Monday.
USD/JPY
The USD/JPY cross edged higher at the start of the week, gaining 0.1% to 113.65. The pair has been involved in a series of choppy trades in recent weeks, but continues to trade north of 113.00. Immediate resistance is likely found at the psychological 1.1400 level, which also represents the top of an ascending trendline. A clear break above this level would push the RSI into bullish territory, setting the stage for a possible re-test of the 27 October high near 114.50.
EUR/USD
Europe’s common currency was little changed against the dollar on Monday, with the EUR/USD continuing to trade in the mid-1.1600 region. The EUR/USD faces immediate support at 1.1620, followed by 1.1590 and 1.1550. On the opposite side of the spectrum, resistance is likely found at 1.1690, followed by 1.1720 and 1.1750. The pair will get plenty of action this week in the form of all-important economic data.
GBP/USD
Cable suffered swift declines on Monday, with prices fast approaching 1.3100. The GBP/USD exchange rate was last down 0.5% at 1.3121. It continues to hold above 1.3100, but that might not be for very long. Pound sterling is suffering from political pressure tied to the Conservative party’s letter of no confidence in Prime Minister Theresa May.
