The ECB leaves key interest rate unchanged - and signals the next hike will not happen before June.
Economical News
USD
It has been a difficult week for the greenback which is reaching rock bottom against most major currencies, and hitting record lows against the AUD and NZD. Oil prices are very high and putting a lot of pressure on the US economy, causing positive labor figures to have no effect on the USD selloff. The Import Price Index, which measures the monthly rate of inflation for imported goods, was released yesterday at 1.7%, exceeding expectations by 1%. Although such a reading should have had a positive effect on the USD, it was shrugged off due to the simultaneous release of a disappointing Weekly Unemployment Claims report and the ECB's Press Conference that took place in Europe, and drew most of the attention.
Today, the producer price index (PPI) is scheduled for release, providing a different perspective on national inflation before the important retail sales report is announced next week. The US Trade Balance and Consumer Sentiment will be released at 12:30 GMT and 14:00 GMT, respectively.
The importance of those events rises as the EUR/USD is now trading at its two year high, above 1.3500. While a significantly better than expected release might prompt a USD rebound, anything less than that might send the EURUSD towards the 1.36 level
EUR
The European Central Bank decided to leave the interest rate unchanged at 3.75% yesterday, matching market expectations. Although the ECB Governor Trichet did not use the words “strong vigilance” in the press conference that followed the interest rate statement release he did mention that the bank will “very closely monitor” price developments and will act in a “firm and timely manner”. Those careful tones convinced traders that the rate will most probably remain unchanged for next month as well.
The only important piece of information coming out today from the Euro Zone is the Industrial Production, forecasted to rise 0.4% after falling 0.2% the previous month. Such a reading can surely give the EUR the additional momentum it needs to continue climbing higher.
JPY
The big question regarding the JPY is whether it will be discussed with great attention in the upcoming G7 meeting. The common belief is that the weaker the JPY gets before the meeting, the more it would be impossible for the committee to ignore the currency weakness. Till then, carry trades continue being the name of the game as traders continue shorting the currency in favor of better yielding currencies.
The Japanese market is closed for the weekend, so no releases are expected today. Traders will be waiting to see how the G7 meeting unfolds, and whether next week's Consumer Confidence might spice the Japanese economy with some optimism.
Technical Analysis
EUR/USD
There are no signs of weakness in this pair's uptrend, and both daily and intraday oscillators are very bullish. By drawing a fibo on the 1.2470-1.3365 move, we can establish a first target of 1.3573, the 123.6% extension.
GBP/USD
The GBPUSD is in the midst of retesting the 1.99 resistance area. Oscillators, Daily and intraday, are very bullish, and it does not seem that the pair lacks the required momentum. Nevertheless, a failure to continue climbing further might generate a negative MACD divergence on the 4H, providing a good opportunity for a cautious short.
USD/JPY
After hitting a week low of 118.50, the USDJPY is near its substantial 118.40 support. Both long, medium and short terms trends are up, and current levels seems convenient for initiating new long positions.
USD/CHF
Taking a look at the 4H chart, an upsloping channel is extending since mid march, and price action is nearing it lower boundary at 1.2090. A breech might clear the way for a move at the size of the channel, around 150 pips. On the other hand, a bounce back might send the pair back above 1.23.
Wild Card
EURCAD
Looking at the daily chart of this forex pair, the pair trends in a clear upsloping channel that extends since early January 2007. The bounce back from 1.5268 might send the pair back to the channel's upper boundary above 1.57, which is also consistent with the pair's uptrend.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
|
 |
|
|
|
| Weekly Trend |  |
|
|
|
|
|
| Resistance | 1.3545 | 1.9965 | 119.25 | 1.2185 | 0.8350 | 0.6838 |
| 1.3530 | 1.9835 | 118.92 | 1.2160 | 0.8335 | 0.6822 | |
| 1.3509 | 1.9815 | 118.70 | 1.2148 | 0.8322 | 0.6807 | |
| Support | 1.3490 | 1.9810 | 118.85 | 1.2145 | 0.8285 | 0.6812 |
| 1.3475 | 1.9780 | 118.65 | 1.2120 | 0.8170 | 0.6800 | |
| 1.3455 | 1.9762 | 118.50 | 1.2105 | 0.8162 | 0.6788 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 04/13/07 | 10:00 | EUR | Industrial Production | MAR | -0.2% | 0.4% |  |
| 04/13/07 | 13:30 | USD | PPI | MAR | 1.3% | 0.7% |  |
| 04/13/07 | 13:30 | USD | Core PPI | MAR | 0.4% | 0.2 | |
| 04/13/07 | 13:30 | USD | US Trade Balance | MAR | -59.1B | -60.2B | |