Forex trading plan for April 22
The US currency is struggling to recover following the last week’s selloff with the USD index reaching 98.70 on Tuesday. The US corporate profits are coming out slightly better than expected – in comparison to reduced forecasts. This factor could render some support to the US financial markets in the near term. You should also watch the US existing home sales and crude oil inventories on Wednesday.
ZEW economic activity indices came out mixed on Tuesday with the German figures missing expectations (53.3 vs. 55.6 expected). On the contrary, euro area index surprised to the upside (64.8 vs. 63.7 expected). Euro zone’s economic calendar is rather light tomorrow, while on Thursday the market will focus on a block of PMI indices. Greek problem will remain on the table this week, pressuring the euro. Volatility could jump with every new headline, so watch the news flow.
EUR/USD has already given up 50% of the last week’s gains, falling below 1.0700. Continued USD recovery could put more pressure on the pair. Targets lie at 1.0660 (recent low) and 1.0620 (trend support).
Cable follows the market trend, descending from the last week’s peak of 1.5050 (55-day MA). We expect the pair to reach 1.4810/00 area in the coming sessions. On Wednesday, the BOE is scheduled to release its meeting minutes. However, we doubt that many Committee members support a rate hike in the current environment.
Watch Australia CPI on Wednesday – consumer prices are expected to have added only 0.1% in Q1 compared to 0.2% in Q4. We expect AUD/USD to stay under pressure: low inflation supports policy-easing expectations on a May 5 meeting. Technical support is seen in the 0.7700/0.7680 area these days. A break lower would open the way back to 0.7600 and 0.7550.
The pair was in demand on Tuesday, testing the 55-day MA (119.60) to the upside. Watch the 120.50 resistance line that connects the March and April highs. Japan is scheduled to release March trade balance – deficit is expected to tighten.