The U.S. dollar was seen trading rather flat on Monday. Lack of economic data and a modest recovery in the equity markets saw most of the currencies trading in a range. Earlier today, BJ Governor Kuroda said that the central bank must maintain its QE program as it takes time for inflation to reach the BoJ's 2% inflation target rate. Kuroda was addressing the Lower House Budget Committee.
Looking ahead, the economic data today will focus on the annual CPI data from the UK and will cover the period of January. Economists forecast that headline CPI in the UK rose 2.9% on the year. This marks a slower pace of increase in inflation for the second month. Core CPI is however expected to rise 2.6% on the year.
In the U.S. trading session, FOMC member Loretta Mester will be speaking while later in the evening, Japan will be releasing its preliminary GDP data. Economists forecast that GDP advanced 0.2% on the quarter, down from 0.6% previously.
EUR/USD intra-day analysis
EUR/USD (1.2297): The EUR/USD was seen retracing its declines following Friday's doji pattern. The rebound to the upside could see a follow through in the short term with the potential lower high being formed on the current retracement. Resistance is seen near 1.2333 - 1.2363 level which could see price posting a reversal. This could potentially pave way for further declines to the initial support level at 1.2090 - 1.2070. Alternately, in the event that EUR/USD breaks above 1.2363, we could anticipate further room to the rally above the resistance level.
GBP/USD intra-day analysis
GBP/USD (1.3841): The British pound stayed flat with price action confined to Friday's range. Price was seen to be briefly consolidating near 1.3855 level where resistance is likely being formed. In the event that GBP/USD breaks above this level, we can expect price action to test 1.3978 which marks the next level of resistance. To the downside, the support seen at 1.3611 - 1.3589 will be tested in the near term. This will potentially mark the correction to the rally following which we could see renewed momentum taking shape.
NZD/USD intra-day analysis
NZD/USD (0.7261): The NZD/USD currency pair has been modestly drifting higher. Following the breakdown below 0.7333 level, price action formed a minor support level at 0.7280. A retest back to this level could see NZD/USD forming resistance. A reversal at this level will signal the downside price action. NZD/USD could be seen targeting the support at 0.7160. To the upside, a breakout above 0.7280 will keep NZD/USD trading flat within the resistance and support levels. Further gains can be expected only on a breakout above 0.7333 level.
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