House of Commons voted for early U.K. general election but sterling shrugs off. U.S. economy continues to expand, even though at a soft pace, per Fed’s Beige Book and supported the domestic currency. Euro is broadly higher as E.U. CPI met estimations of 1.5% in March. WTI dropped more than 6% lower this week following Kuwait’s oil minister comments.
Fed’s Beige Book Reveals That Economy Grows Slightly
After a muted trading session on Tuesday, the U.S. dollar had an appreciation against its peers on Wednesday, following the publication of Fed’s Beige Book. It revealed that the U.S. economy overall continues to grow at a modest-to-moderate pace in the period of mid-February to end of March. The labour market tightened further as the country approaches full employment while there was a modest increase in the wages. The “soft” expansion in various sectors of U.S. economy across the nations, will probably lead the policymakers to leave the fund rate on hold at the next policy meeting on May 2 – 3. No other macro data released from the U.S. yesterday, but as mentioned Beige book was enough to bolster the domestic currency. Today, the economy calendar has smattering low-level data from U.S. thus we wouldn’t expect big volatility from the side of greenback.
USD/JPY – Technical Outlook
The USD/JPY pair refuses to fall further and is now showing signals for a small upside retracement before continues its bearish movement. Yesterday, the greenback traded higher against the Japanese yen as the pair rebounded on the 50-weekly SMA which is near the 108.15 support level. Since last month, the pair moved sharply lower and is in progress to create the second red month in a row. Moreover, the currency pair plummeted more than 3.2% so far and posted a fresh five-month low at 108.13.
From the technical point of view, over this week, the price is fairly directionless as it failed to plunge below the latter level and also it does not move significantly higher. Our expectation is an upside move until the 110.10 resistance level which overlaps with the 200-SMA and then back to the previous low. The Relative Strength Index (RSI) is flattening into the negative area as well as the MACD oscillator and is trying to create a bullish crossover with its trigger line.
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