Yen strengthens as BOJ leaves rates unchanged
The Japanese Yen strengthened against the USD after the BOJ released its interest rates decision. The bank left rates unchanged at minus 0.1% and said that it will continue with the 10-year Japanese Government Yields at about zero percent. The two decisions were what the market was expecting. In the statement, the bank highlighted the ongoing problem of global growth, which will likely affect the country’s exports. This slow growth comes at a time when rates are in the negative zone and its inflation target of 2% looks less attainable.
Drama in the UK parliament continued as the members voted to delay the country’s departure from the European Union. The motion was brought by the government, to delay Brexit by three months, and won the vote by 412 to 202. This came a day after the members voted to prevent a no-deal Brexit and two days after they rejected Theresa May’s deal. The premier will again try to find a compromise before the March 29 deadline. This extension will make it difficult for UK companies to plan, foreign investors to invest and for individuals to plan ahead.
The euro gained against the USD in overnight trading ahead of key inflation numbers from the EU. The numbers are expected to show that consumer prices rose by 1.5% in February. This will be unchanged from the previous month. On a MoM basis, the headline CPI grew by 0.3%, which was higher than the January’s minus 1.0%. The core CPI is expected to remain unchanged at an annual and monthly rate of 1.0% and 0.3% respectively. This comes after last week’s central bank decision to leave rates unchanged and extend any possibility of a rate hike from end of summer till end of the year.
The EUR/USD pair rose to a high of 1.1325, which was along the 61.8% Fibonacci Retracement level. It was also the highest level since Monday this week. On the hourly chart, this price is slightly above the 50-day and 25-day EMAs as the RSI approach the 70 level and the accumulation and distribution indicator moves lower. The pair will likely continue moving higher, although this could change depending on the EU inflation numbers.
The USD/JPY pair declined after the BOJ decision earlier today. The pair reached a low of 111.48, and then pared some of those losses. This price is along the lower line of the Bollinger Bands on the hourly chart while the RSI has dropped from 70 to the current 50. The Average True Range (ATR) indicator has also started moving up. The pair will likely resume the upward trend and test the important level of 111.88.
The price of Brent crude oil declined even after a report showed that OPEC was continuing to slash production. The pair reached an intraday low of 66.90. On the hourly chart, this price was between the 100% and the 61.8% Fibonacci Retracement level. It is also between the middle and upper line of the Bollinger Bands while the Bears Power strength is easing. The pair could drop to the 61.8% Fibonacci level of 66.50 before starting a fresh upward trend.