Bank of Japan will announce its interest rate decision during the Asian morning on Friday and is widely expected to remain on hold at -0.10%.Currently JPY OIS imply a probability for BoJ to remain on hold at 91.62%. Softening inflation data, household spending and weak wage growth also support the argument to remain on hold. Market focus is expected to shift to the accompanying statement, however no surprises are expected. The key issue seems to be if the BoJ will continue to project the inflation rate hitting its target of +2.0% yoy in 2019 or not. Should there be a rather dovish tone we could see the JPY weakening.
USD/JPY rose yesterday breaking the 109.20 resistance level. We could see the pair continuing its rise today as the market positions itself ahead of the BoJ interest rate decision. Should the pair find fresh buying orders along its path we could see it breaking the 109.76 resistance level and aim for the 110.45 resistance barrier. Should it come under selling interest, we could see it breaking the 109.20 support level and aim for the 108.57 support barrier.
ECB is to announce its interest rate decision today and is widely expected to remain on hold at 0.00%. Currently, EUR OIS imply a probability for ECB to remain on hold at 98.39%. Market focus is expected to shift to the accompanying statement and the following press conference. We see the case for the statement to sound a bit more cautious and a bit less upbeat as recent financial data were quite soft. Should there be a more dovish tone we could see the EUR weakening.
EUR/USD dropped further yesterday breaking the 1.2175 support line, however corrected somewhat during today’s Asian morning. We see the case to continue in a bearish market as the ECB interest rate decision could weaken the EUR side, while on the other hand the USD side seems to be still enjoying a positive momentum. Should the bears continue to be in the driver’s seat we could see the pair breaking the 1.2175 support line and aim if not break the 1.2135 support level. Should the bulls take the reins we could see the pair breaching the 1.2220 resistance line.
Cryptocurrencies are on the rise for the past week, with bitcoin breaching clearly the 9000 psychological threshold yesterday. Bitcoin seems to be the pacesetter, while Cryptos like Etherium, Ripple and Litecoin seem to follow the same direction with similar patterns. Headlines like Sweden’s Riksbank considering to issue an e-Krona, seem to be perceived by traders as an indication of crypto’s going mainstream, reawakening interest in the crypto-market. Further headlines, like crypto currency projects being backed by big investors and Goldman Sacks hiring former Crypto trader to lead digital assets, could be feeding the crypto market to growth. Should there be further positive headlines we could see the cryptos strengthening further.
Yesterday Bitcoin clearly broke the 8895 resistance level (now turned to support). We see the case for the crypto-currency to continue to rise in the short-term. For our opinion to change, we would require Bitcoin to break the upward trend-line incepted since the 12th of April and tested on the 20th of April. Should the crypto-currency continue to find fresh buying orders we could see it reaching if not breaching the 9775 resistance line. Should it come under selling interest we could see it breaking the 8895 support level and aiming for the 7425 support barrier.