EUR/USD subdued, GBP/JPY and USD/JPY rally on tweaked BoJ forward guidance
Outlook on EUR/USD, GBP/JPY and USD/JPY amid BoJ meeting and avalanche of European preliminary GDP and CPI releases.
EUR/USD consolidates into month-end
EUR/USD spent this week in a volatile sideways trading range above its March-to-April uptrend line at $1.0998 which may be revisited on Friday amid a plethora of European nation preliminary gross domestic product (GDP) and consumer price index (CPI) data and following Thursday’s much weaker than expected US quarter one (Q1) GDP reading of 1.1% versus and expected 2%.
The cross remains capped by the $1.1075 to $1.1095 zone and is seen heading back down towards the psychological $1.10 mark and the March-to-April uptrend line at $1.0998.
Provided the next lower Tuesday low at $1.0965 holds on a daily chart closing basis, the January 2022 low and early-March 2022 high at $1.1121 to $1.1122 remain possible upside targets. Support below $1.0965 can be found at the $1.0929 late March high and also at last week’s low at $1.091.
GBP/JPY surges higher as review of BoJ monetary policy is announced
GBP/JPY has come under pressure following an announcement of a review of policy by the new Bank of Japan (BoJ) governor, though Mr Ueda held off on any change to the ultra-loose monetary policy.
The pair has thus risen to levels last traded in November of last year and is gunning for the psychological ¥170.00 region, above which sits the October 2022 peak at ¥172.13.
Good support can be spotted between last week’s and this Tuesday’s highs at ¥167.97 to ¥167.96. While the next lower low seen earlier this week at ¥165.43 underpins, the medium-term uptrend remains valid.
USD/JPY rallies as BoJ tweaks forward guidance
Newly appointed governor of the BoJ Kazuo Ueda kept short-term interest rates at -0.1% and 10-year bond yields around 0% but modified the central banks’ forward guidance by removing references to the COVID-19 pandemic and vowing to keep interest rates at “current or lower” levels, sparking a sharp sell-off in the yen.
USD/JPY thus surged higher by over 1% and is fast approaching its uptrend channel resistance line at ¥136.14, above which beckons the 200-day simple moving average (SMA) at ¥136.95.
Potential slips should find support between the mid-March and last week’s highs at ¥135.13 to ¥135.11.
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