It promises to be an interesting week. Starting Tuesday and ending Friday the economic calendar is filled with important macroeconomic events.
- Australia, USA, UK central bank week – interest rate decisions to be announced
- inside bar on USDJPY may start the correction of growths
- Correlation of US 10Y bonds with USDJPY pair
On Tuesday, the Reserve Bank of Australia (RBA) will make decisions on interest rates in Australia. It is forecast to raise to 0.25% from the current rate of 0.10%. Wednesday – at 13:15 so called small payrolls (ADP) and at 19:00 FED decision on interest rates in the USA.
The long-awaited event, the market assumes an increase of 50 points and setting interest rates at 1%. Any difference from the forecasts will have a significant impact on the valuation of the dollar. Also keep a close eye on Chairman Powell’s conference, which will start half an hour later.
Thursday – at 12:00 we will learn the decisions of the Bank of England, the markets are predicting an increase of 0.25% to 1.0%. At 14:15 BoE President Bailey’s press conference could also be an event that raises volatility on pairs with the British pound.
For the dessert of the week on Friday we will learn the US labour market report -payrolls.
USDJPY – is this the end of the weakening of the yen?
Given such a busy economic calendar and unpredictable volatility, I focused on the technical picture of several instruments. The most clear situation has currently appeared on USDJPY. The last two days of April formed an inside bar formation. The MACD oscillator tends to enter a downward phase. If at the close of today’s session the oscillator is still down, it may be a signal to start the correction of the recent strong growths. Undoubtedly, Wednesday’s FED decision may decide the direction for the pair for the coming days. A hawkish FED can weaken the yen even more.
It is also worth to follow the interest rate of US 10-year bonds. There is a high correlation of this instrument with USDJPY. Any increase in the US10Y interest rate carries with it a proportional weakening of the Yen.
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The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions which you can attend from Monday to Friday.
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