Will Federal Reserve cut the Q3 again?
As we remember last trading week Draghi said that if the inflation in the EU stays for a long period the European regulator may start the program of quantitative softening.
The ECB left interest rates at the lowest level of 0.25 % and it does not plan to raise it in the near future. At the same time we highlight the employment data in the U.S., which showed an increase of 192 thousand in March. Taking into the consideration this data for the previous months we conclude that the decrease in the number of unemployed rate in the beginning of this year was only temporary.
If the pair goes down its primary goal will be the mark 1.3560. The level 1.3640 breakthrough is the single condition for this step.
From a fundamental point of view, weak UK data, published the previous week still pressures on the pound. The Tertiary Industry Index, PMI relative employment and the PMI for the services sector are declining. Although these data are generally considered positive, but they are worse than the previous figures. Based on the foregoing, we conclude that the economic growth is slowing in the UK.
We can start selling the pair if the price breaks the support 1.6537 down. The price will fall to the support level 1.6465 in this case.
Buying will become possible if the pair breaks the resistance 1.6683 up. Still do not forget that this week is dedicated to the UK news flow.
We expect a correction this week. From the technical point of view we can start buying if the pair breaks the resistance 103.80 upward. The target for the USD/JPY growth is the resistance 104.85. Keep in mind that the U.S. Federal Reserve may again reduce the quantitative softening program by 10 billion dollars in the midst of the current trading week. This may become a new driver for the greenback to grow again that will down the yen.
From a fundamental point of view when trading you should first pay attention to the Bank of Japan press conference and its comments on monetary policy.
The pair may fall to the 101.70. The growth may be continued to the mark 104.
Ruban SergeyAnalyst of «FreshForex» company
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