The EUR/USD shall start moving soon | 04 May 2014

Euro

The single currency has recovered after a preliminary assessment showed that consumer price inflation in the region has increased in April by 0.7% w / w after 0.5 % the previous month which is slightly not short of expectations and +0.8%.

The base index in annual terms grew by 1.0 % in April after the February growth by 0.7%.

The ECB is likely to prefer to wait until the inflation data for May release as then we can talk about the absence of seasonal fluctuations. According to experts' expectations for the foreseeable future inflation will remain significantly low. The ECB will have to consider other risks that are combined with low inflation will affect the economy.

The Non-Farm showed a moderately positive background in April to the level 220,000, the highest figure in the last 5 months. The number of Initial Jobless Claims gradually decreased in April which also is favorable for the employment rate in the agricultural sector. In the light of this we can expect the new data on the level of the median forecast which will have a moderate support for the U.S. dollar.

The support levels are 1.3840- 1.3860, and the resistance levels are 1.3910 - 1.3930.

MACD is horizontal, indicating the current corrective movement rates.

Trading Recommendations

We recommend going long on falls with the target 1.3950-1.4000 with stop-loss at 1.3760.

Pound

The economy key risk to the expert's opinion is the further strengthening of the housing market, accompanied by a decline in lending standards. Nevertheless, interest rates likely will not rise immediately and gradually.

It is worth paying attention to the PMI for the construction sector. The mortgage lending release showed minimum values for the last five months in March, indicating the negative trends in the UK construction sector. Amid this it is difficult to rely on the data output better than consensus-forecast which is negative for the pair. American labor market can also support the demand for the U.S. currency and we can expect a gradual cable decline during the day. The support levels are 1.6840 - 1.6860, and the resistance levels are 1.6910 - 1.69300.

MACD is horizontal, indicating the current corrective movement rates.

Trading Recommendations

If the pair tests 1.6920-1.6950 we recommend opening the short positions with the target level 1.6820-1.6800.

Yen

The Bank of Japan will continue to mitigating policy until inflation is stabilized at around 2%. The regulator has lowered the forecast for GDP in 2014 to 1.1% from 1.4% forecast for 2015 +1.5%, as before, in 2016 +1.3%. The inflationary processes in combination with the increase in retail sales can expect to yield a good data that will moderate the support to the Japanese currency.

The support levels: 102.10- 102.30, and the resistance levels: 102.60- 102.80.

MACD is at zero area.

Trading Recommendations

If the price goes down we recommend going long with the main goal 103.00-103.50.