It’s all about US CPI numbers this european afternoon. The expected CPI number (YoY) for March is 5.2%, lower than the previous month's print of 6%. More importantly, the Core CPI (YoY) release for March is expected at 5.6%, up 0.1% from the previous month print. And the Fed repeatedly points out that core inflation in particular is still too high. In this respect, today's figures must deviate significantly downwards so that the Fed does not raise interest rates further on 3 May (see G10 Central Bank Calendar).
It is hard to tell if the market is truly reflecting the FED's statements and expectations for today's CPI numbers. The Dollar Index (DXY) is trading at depressed levels not far away from the lows of the year. To me, the chart does not look like we have seen the bottom yet. But in the medium term I think it is more likely that the 100 level will hold. In this respect, I cannot rule out a significant dip below the 101.30 support, but I would use this to buy dollars, depending on the situation.*
EURUSD -- 1.0932
We expected sideways trading in the last update and were not disappointed. The dip on Monday afternoon to a low of 1.0831 in thin holiday trading was there to be bought. In general, the currency pair continues to trade with an upside bias above the mid Bollinger band (1.0839) and a test of the yearly high (01feb - 1.1033) seems to be on the agenda. This would be in line with the assumption described above that another dollar dip could be missing. Only below the support zone at 1.0800 / 1.0787 it becomes dangerous for euro bulls.
GBPUSD -- 1.2438
Last week it already looked like a breakout from the medium-term range 1.1841 / 1.2447, but for now the upper end has held. However, the price action must be closely monitored with sterling shorts. It cannot be ruled out that the pound will escalate upwards on the next attempt after e.g. significantly weaker than expected CPIs. Only below the mid Bollinger band (1.2336) does the bullish picture turn again and the dollar could continue to rise against the pound.
USDJPY -- 133.79
The currency pair is trading along the upper Bollinger band (134.06 today) and I think another rally is the more likely scenario at the moment. The next resistance zone should be around 134.75/135.10. However, it could also run directly to 135.50/136 in a larger movement. There one could also consider shorts again, using the 200-day line as an upper limit.
Good luck,
Sebbo
(*reminder: my content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances.)