Alright, let’s get this week started with my take on what I think will happen in the markets in the coming days.
We saw a lot of movement among the major pairs last week following a handful of market-moving events. In Japan, the Bank of Japan (BOJ) finally decided to adopt an unlimited asset purchase program and the inflation target. The yen initially rallied as the BOJ statement disappointed expectations, however, Japanese officials later said that they prefer USD/JPY to be trading around 95.00-100.00.
As for the euro, it got a boost when it was announced that banks would start repaying their LTRO loans. The pound didn’t get any lovin’ though, especially not after the preliminary Q4 2012 GDP report came in worse than expected.
This week, I think that some of the market’s focus will shift back to the U.S. Our forex calendar lists a handful of top-tier economic data for the dollar including the durable goods report, advance GDP, FOMC, and NFP. I’ll surely be on my toes for them!
I’m pretty bearish on the pound given the currency’s fundamental landscape. However, Cable has been making low after low and I can’t help but think that the pair would soon need to pull back before extending its downward move. I’ll be watching out for that and keeping close tabs around 1.5780 where the pair could test the falling trend line.
I want to jump in long, but with the pair very far away from both the 100 and 200 SMAs, I think we could see a pullback soon. I’m going to watch this pair closely for a possible entry around the 38.2%-50.0% Fibonacci retracement levels.
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