After a massive strengthening amid the outcome of the Fed meeting, the dollar is losing ground in the foreign exchange market, except for the pair USD/JPY. As you know, the Bank of Japan did not begin to change monetary policy at its today's meeting. At the same time, the Bank of Japan left its assessment of the national economy unchanged, noting that it "is moving towards moderate growth". According to the board of the Bank of Japan, a weak yen is a plus for capital spending, employment in Japan.
At the same time, investors who follow the situation in the economy of the eurozone will pay attention to inflation data for May,published at 09:00 (GMT) on Friday.
Last week, the ECB did not change its monetary policy, but for the first time in many months, did not mention the propensity to mitigate it. Against the background of the acceleration of the growth of the eurozone economy at the beginning of this year, this again inspires confidence of investors that the ECB will soon announce the beginning of the completion of the QE program in the eurozone.
At the same time, if economic data on the US are moderately restored, the dollar will gradually increase its positions in the foreign exchange market. In combination with caution of the ECB against the background of low inflation in the eurozone, this should increase the gap in the levels of profitability in favour of the dollar.
Of the news for today, it is also worth paying attention to data from the US, which will be published during the US trading session (12:30 - 14:50 GMT). Later (at 16:45) will begin the speech of the representative of the Federal Reserve Robert Kaplan, who is the executive director of the Federal Reserve Bank of Dallas. Surely his speech will support the dollar, as recently representatives of the Federal Reserve almost in one voice speak about the Fed's commitment to carry out a gradual tightening of monetary policy in the US.
The EUR/USD pair, meanwhile, is growing from the opening of today's trading day, again rising above the short-term support level 1.1155 (144-period moving average on the 4-hour chart).
Technical indicators on the 1-hour, 4-hour charts went to the buyers’ side, signaling an upward correction after the EUR/USD fell from the beginning of the month.
In case of resuming the positive dynamics and returning to the zone above the levels of 1.1200 (200-period moving average on the 1-hour chart), 1.1230 (local maxima), the EUR/USD pair may head (in the upward channel on the daily chart) towards the recent annual highs Near the level of 1.1280 (the Fibonacci level of 23.8% of the corrective growth from the lows reached in February 2015 in the last wave of global decline of the pair from the level of 1.3900) and further to the level of 1.1340 (144-period moving average on the weekly chart).
In the case of the breakdown of support levels 1.1130, 1.1110 (200-period moving average on the 4-hour chart), negative dynamics will again prevail, which will force us to return to consideration of short positions in the EUR/USD pair.
Support levels: 1.1155, 1.1130, 1.1110, 1.1100, 1.1080, 1.1000, 1.0950, 1.0890
Resistance levels: 1.1200, 1.1230, 1.1280, 1.1340, 1.1600
Trading recommendations
Sell Stop 1.1130. Stop-Loss 1.1185. Take-Profit 1.1110, 1.1080, 1.1020, 1.1000, 1.0950, 1.0900
Buy Stop 1.1185. Stop-Loss 1.1130. Take-Profit 1.1200, 1.1230, 1.1280, 1.1340, 1.1600
