EUR/USD: Sell At 1.0700, Target 1.0400

Taken Positions:

• USD/JPY: long at 121.10, target 123.55, stop-loss 119.60, risk factor *

• GBP/USD: short at 1.4845, target 1.4650, stop-loss 1.4930, risk factor **

  USD/CAD: long at 1.2680, target 1.2860, stop-loss 1.2700, risk factor **
• AUD/USD: short at 0.7640, target 0.7340, stop-loss 0.7790, risk factor ***

• NZD/USD:short at 0.7390, target 0.7130, stop-loss 0.7510, risk factor ***
• Pending Orders
• EUR/USD: sell at 1.0700, if filled - target 1.0400, stop-loss 1.0805, risk factor **
• USD/CHF: buy at 0.9970, if filled - target 1.0300, stop-loss 0.9880, risk factor *
• EUR/GBP: sell at 0.7250, if filled – target 0.7040, stop-loss 0.7350, risk factor ***

EUR/USD: Investors Cautious Ahead Of Fed Statement

(sell at 1.0700)

Euro zone consumer prices rose 0.6% mom and fell 0.3% yoy, less sharp that a 0.6% yoy decline in January. The reading was in line with expectations. A sharp fall in the price of fuel and heating oil pulled down consumer prices in the Euro zone. Core inflation, which excludes the volatile energy component, amounted to 0.7% yoy, accelerating from the 0.6% yoy rate in January. Energy prices rose 1.6% mom and fell 7.9% yoy in February. Prices of unprocessed food, another volatile component of the CPI, rose 0.8% mom and 0.4% yoy, the first annual rise since a 0.2% increase in November.

• Eurostat said employment in the euro zone in the final quarter of 2014 rose 0.1% qoq and was 0.9 percent higher than in the same period of 2013.
• The sentiment among German analysts and investors improved in March for a fifth consecutive month, hitting its highest level since February 2014. ZEW survey of economic sentiment increased to 54.8 in March from 53.0 in February. The reading was below the consensus forecast of 58.2. A separate gauge of current conditions climbed to 55.1 from 45.5 in February, surpassing a consensus forecast for a reading of 50.0.

• European Central Bank President Mario Draghi said the bank's stimulus, lower oil prices and structural reforms in Euro zone economies were helping support growth. He added: “Confidence among firms and consumers is rising. Growth forecasts have been revised upwards. And bank lending is improving on both the demand and supply sides.” Earlier on Monday, the ECB said it settled EUR 9.751 billion of public-sector bond purchases in the first week of the programme.
• ECB policymaker Peter Praet said the euro zone is experiencing a cyclical recovery but the European Central Bank alone cannot resolve the structural problems in the economy.
• The EUR rose for a second day against the USD on Tuesday. Investors wait for tomorrow’s Fed statement that will test expectations of a mid-2015 rise in U.S. interest rates. The removal of the word “patient” from the statement (which is supportive to EUR/USD bears) is almost a done deal. However, investors want to take risk off their books ahead of the Fed meeting.
• Our short EUR/USD position was stopped at 1.0600 and we took small profit (1.0625-1.0600). We are looking to get short again at 1.0700.

Significant technical analysis' levels:
Resistance: 1.0620 (high Mar 16), 1.0634 (high Mar 13), 1.0684 (high Mar 12)
Support: 1.0551 (session low Mar 17), 1.0457 (low Mar 16), 1.0400 (psychological level)

USD/JPY: BOJ Maintains Easy Monetary Policy
(stay long)

• The Bank of Japan decided to maintain its current monetary policy.
• The BOJ downgraded the outlook on prices, saying the CPI rate “is likely to be about 0% for the time being” due to declining energy prices. The BOJ maintained the view that inflation expectations "appear to be rising on the whole from a somewhat longer-term perspective" despite its changed view on prices. The BOJ hopes that wage increases will help boost consumer spending, as many major companies are expected to raise pay scales for their employees during the ongoing spring wage talks. On Wednesday, Japan's biggest firms will announce wage plans following annual talks with labor unions, the results of which will be key to the success of premier Shinzo Abe's push to drive Japan sustainably out of deflation.
• The BOJ said the domestic economy as a whole "has continued its moderate recovery trend" and left unchanged its assessment in all activities including exports, personal spending and industrial production.
• Bank of Japan Governor Haruhiko Kuroda said lower energy costs may push consumer prices into negative territory but it will not derail a pick-up in inflation as the economy recovers, signalling that he sees no immediate need to expand stimulus. He said prospects of improving wages and economic growth will underpin inflation expectations. He added: “There is absolutely no change to our stance of aiming to achieve our 2% inflation target at the earliest date possible with a timeframe of roughly two years.”
• We expect USD/JPY to rise in the coming days. The BOJ maintained its view of moderate economic expansion and lowered inflation outlook. The Fed, in contrast, is likely to take out “patient” from its statement on Wednesday paving the way for a possible rate hike in June. We stay long at 121.10. Technical situation of the chart is also supportive to the USD/JPY bulls. The tankan and kijun lines are positively aligned, highlighting the underlying upside potential.

Significant technical analysis' levels:
Resistance: 121.53 (session high Mar 17), 121.57 (high Mar 13), 121.67 (high Mar 12)
Support: 121.09 (low Mar 16), 120.66 (low Mar 12), 120.62 (low Mar 9)

AUD/USD: Dovish RBA Minutes
(short for 0.7340)

• In minutes of the March 3 meeting, when the Reserve Bank of Australia surprised some by not delivering a rate cut, the central bank left the door wide open for another cut in interest rates but said that some members “saw advantages in receiving more data to indicate whether or not the economy was on the previously forecast path.”
• Debt markets imply about 25% percent of a 25 bp. cut next month and are fully priced for a move by June. In the opinion of GrowthAces.com there will be no rate cut in April.
• The RBA hinted it would be happy to see the AUD fall further, saying it remained above most estimates of fundamental value, particularly given the steep declines in key commodity prices. Members noted that monetary policy was already accommodative and acknowledged that a lower AUD would help achieve balanced growth in the economy.
• The AUD/USD traded near 0.7640 prior to the March RBA minutes. The rate fell after the release of rather dovish minutes to 0.7611. However, this fall was short-lived and the rate recovered soon.
• We remain short at 0.7640. Technical situation is supportive to our short position. The pair continues to consolidate recent losses and 10-dma has capped rallies. Our target is 0.7340, just above daily low on May 6, 2009.

Significant technical analysis' levels:
Resistance: 0.7706 (10-dma), 0.7713 (high Mar 13), 0.7731 (high Mar 12)
Support: 0.7610 (session low Mar 13), 0.7561 (low Mar 11, 2015), 0.7451 (low May 18, 2009)