The yen is in the spotlight this morning as the BoJ has planned a special MPC meeting. Forex traders are speculating that the BoJ will address the strong yen and introduce measures to weaken the currency. On the news, the yen has been trading lower this morning with the USDJPY shooting up 50 pips to 87.00 from early morning. At Go Forex we believe that the BoJ's announcement may disappoint the Forex traders that are shorting the yen. With government members pushing for the BoJ to ease the yen's strength, the BoJ may feel compelled to do make a symbolic measure to appease its critics.
USDJPY Support/Resistance 85.85/87.12
Early this morning the RBA raised its interest rates to 3.75% from 3.5%. The move was anticipated by Forex traders. As a result, the AUDUSD failed to rally as traders were hoping for a more hawkish tone from the RBA Statement. The statement reiterated nothing new; recovery is on track, CPI inflation is contained, and employment conditions are improving. At Go Forex we believe that traders are most likely reacting to the low inflation outlook. This may lead to fewer rate hikes in the future. Also, profit taking may be at play.
AUDUSD Support/Resistance 0.9118/0.91952
Both the UK and US are scheduled to release Manufacturing PMI numbers today. Also, German Employment data will come out.
Nonetheless, Forex traders appear to be more in tuned whether credit risk is returning to the markets. Therefore, yesterday's initial rally into riskier currencies has abated and we have been range bound since yesterday afternoon.
EURUSD Support/Resistance 1.4972/1.5039
GBPUSD Support/Resistance 1.6375/1.6465