Will the ECB raise the rates that's the question | 06 June 2014

 Euro

The apparent lack of dynamics and expectations from the ECB which will be held on June 5 is quite likely to lead the pair to the local consolidation top with a tendency to the price growth.

The Germany industrial sector will be published on Monday. The labor market data will come out on Tuesday. There will be the euro area GDP on Wednesday. The most important this week news will be published on Thursday, at which time everyone will know the answer to the interest rates question.

At the end of the previous week the currency was traded on 1.3585-1.3625 sideways. After this Friday, the pair made a break through the upper flat boundary.

Trading recommendations

We expect the price movement in the corridor from 1.3560 to 1.3760 and we can try speculative long positions after the level 1.3625 breakdown with the target 1.3700 with the stop loss at the local minimum 1.3580.

Pound

The Member of the Bank of England Monetary Policy Committee Martin Weale said that the Bank of England, if it wants to avoid a sharp and painful rates growth in the future needs to start raising interest rates as soon as possible. The investors expect the Bank of England rate increases by 1.8% over three years.

The Bank of England which keeps the interest rates at a record low 0.5% since March 2009, intends to gradually raise them with reduced pace, and only when the country's economy will strengthen enough.

The cable remains under pressure and has expanded its next step down from the lower top 1.6880, breaking the 1.67 psychological support. The GBP/USD pair break on this level summarizes the "bear" movement resumption towards 1.6667.

Trading recommendations

Now the main bears’ target is 1.6700. We are waiting for new fall to 1.6662-1.6680, this level is expected to stop the pair.

Yen

The Yen grew against the euro and the dollar after the statistical data publication, indicating a Japan inflation sharp acceleration in April, reducing the taking additional steps by the Central Bank is likely to stimulate the economy reported by Forex market analysts.

According to some analysts, fears are growing that the Bank of Japan will not agree to further incentives increase. On the other hand, of course, the U.S. yields remain very low.

Trading recommendations

The pair is likely to continue a gradual decrease to the levels 101.45, 101.27 and 101.00. We expect a possible upward correction to the level 102.30.