Today's FOMC minutes may reveal some new information about future monetary policy. It focuses particularly lot of investors' attention, because last meeting was joint Monetary Committee and Fed board – typical for important discussion and/or decisions. Traders will be looking for clues about exit strategy – recent NY Fed president, William Dudley mentioned it in his speech on Monday. FOMC minutes are said to be the most important today and may deliver some extra volatility on major pairs.
EUR/USD is about to wait.
Pair recently stays in tight 40-50 pips range and fails to break either 1.3690/80 or 1.3730 bounds.
We can mark also some secondary S/R levels:
1.3650/40 – Thursday low, 27th Feb low
1.3750 – 9th – 12th May low
13770 – 12th – 13th may high, Fibonacci retracement 38.2% of post Draghi drop is near.
Technically we trade range by the book – either waiting for breakout or bounces from bands – having in mind that Janet Yellen speech today and FOMC minutes may provide fuel for significant break. Given that Yellen was probably as dovish as possible before, odds seem favourable for hawks.
USD/JPY does not want to wait.
Pair is falling down for couple weeks now and go through support levels one after one. It stays heavy after Bank of Japan statement this morning saying that Japan economy recovers in modest pace and inflation is 1.25% – good news for Japan. On the other side of USD/JPY slide is weak USD that still is not benefitting from good economic data from UK, Japan, and positive expectations about USA. Normally good sentiment and risk appetite boosts USD/JPY pair as source of leverage for commodity investments but it seems not the case this time. Possible reason of this decorelation with sentiment may be position adjustments – pair made 2800 pips from its bottom in 2011/2012. Some big fish may want to cash their positions.
We are now having copule possible levels, where good mood may eventually prevail:
100.70 – February Low
100.30 – September 2013 high
99.50 – range of AB=CD corrective pattern
99.00 – October 2013 high.
Now price is struggling around 200 Daily Moving Average and even if price will break it, we could expect quick recovery above 200 DMA from one of mentioned levels.