Tomorrow will be a busy day for central bankers as Japan, England, and the European Union have interest rate decisions. Only the ECB is forecasted to adjust interest rates higher. Prior to this highly anticipated market event, the euro moved higher on rising interest rate expectations.
The EUR/USD looks to close near its daily high at 1.4338 after opening at 1.4257 as the ECB rate decision approaches. All expectations are for the ECB to raise interest rates by 25 bp tomorrow. Should the ECB commit to further increases to the Minimum Bid Rate, the EUR/USD could surge higher with targets at the 1.4580 level. If the ECB does not signal additional tightening measures, the EUR/USD could fall sharply as expectations in the market run high. Support comes in at the November 2010 high at 1.4280 and the 20-day moving average at 1.4120.
The BOE will release its decision on the Official Bank Rate. No change is expected in the rate but the pound is rising as traders begin to price in an interest rate hike, potentially in May. Today the pound fell following a sharp decline in manufacturing production numbers but the pound rebounded higher in the US session and the GBP/USD looks to close near its opening day price of 1.6334.
The Bank of Japan will announce its interest rate decision tomorrow and the BOJ is not expected to adjust the nation’s interest rate due to the natural disaster last month. In fact, the BOJ may announce additional easing capabilities to spur a recovery in the disaster hit areas. Further declines may be expected in the yen as momentum has swung against the currency. The yen is declining sharply against the euro and a target for the EUR/JPY is located at 128.00. To the downside, support is found at 119.60.
Other relevant articles you may like
Russell Glaser is a Currency Analyst with ForexYard. Russell provides analysis in the FX spot market by employing fundamental research methodologies. In addition to currencies, Russell closely follows the correlation between the Commodities market and the movement of equities. His writings have been published on the ForexYard Trading Blog and associated partner sites. Prior to joining Forexyard, Russell Glaser served as a management consultant in the financial services industry, advising Fortune 100 companies. Russell holds a degree in finance from the Fisher College of Business at The Ohio State University.
