BoE left its policy unchanged | 09 May 2014

Euro

The ECB meeting results were announced - CPI growth rate in the last release was 0.7 % annualized and we do not expect changes in the monetary-credit policy now. Nevertheless, the current euro rate is a threat to the euro area economic growth recovery. German business representatives have stated that the euro rate at 1.40 has negative impact on the business climate of the region's leading economy. The current levels look attractive to open the short positions and amid this we can expect the euro/dollar decrease.

The support levels are 1.3840- 1.3860, and the resistance levels are 1.3910 - 1.3920.

MACD is pointing down, indicating the current downtrend movement rates.

Trading Recommendations

The euro/dollar fell to 1.3840 and started a consolidation phase again. We expect a bounce up to the levels 1.3890.

Pound

The Bank of England minutes on the monetary-credit policy were announced. From the British monetary regulator the investors did not expect surprises and the market reaction to this event will be negligible.

Thus, if the ECB guides the market to understand that the current euro exchange rate is heavily overvalued and carries a negative effect on the economy, the EUR/GBP rate cross decrease can be expected which will support the pound versus the U.S. dollar.

In the light of this we can expect the 70th figure testing where the British currency could face a serious “bears” resistance. In general, we can expect a side trend during the day.

The support levels are 1.6880 - 1.6910, and the resistance levels are 1.6980 - 1.7000.

MACD is pointing up, indicating the current uptrend movement rates.

Trading Recommendations

As well as the euro/dollar pair the pound/dollar entered a consolidation phase after rising. Attempts to grow to 1.7000 were unsuccessful. In turn, the decline was limited by the support in the area 1.6943. The positive sentiment persists and the chances to test 1.7000 are growing.

Yen

The “bulls” on the leading stock markets re-opened the long positions amid a weakening geopolitical risks that will support a moderate demand for the pair dollar/yen. The Initial Jobless Claims were published last week. The American economy is gaining weight and we can expect the consolidation above 102 figures.

The support levels: 101.50- 101.70, and the resistance levels: 102.23- 102.43.

MACD is horizontal, indicating the current corrective movement rates.

Trading Recommendations

The pressure on the USD/JPY remains, we are still at 101.60. The pair wants to recover to 102.00 where the interest in sales is maintained. The risks of renewed reducing are saved. The 101.22 loss will pave the way to 100.68. To loosen the “bearish” pressure the dollar needs to push the yen higher to the 103rd figures.