www.forexnews.com
At 2:00:00 AM Germany Feb PPI m/m (exp 0.2%, prev 0.6%) Germany Feb PPI y/y (exp -0.3%, prev -0.1%)
The dollar held onto Friday's gains against the European majors and yen but traded quietly in Tokyo as dealers had little market moving news to give direction. Dealers estimate trade will diminish this week as many Japanese investors sit on the sidelines ahead of the new fiscal year next week, while the Easter holidays keep the European away from their desks.
EUR/USD held above earlier lows around 87.58 but needs to maintain above 87.50 to avoid a test of 87.10 support which would turn sentiment bearish again for the single currency. Disappointing price action last week contained the euro under its 200-day moving average at 88.62, which provided enough resistance to push the single currency lower. The break below congestion at 87.60/80 also may have marked a top at last week's highs around 88.60 resistance, which would imply the market may now focus on the downside. Support seen at 87.50, 87.10 and 86.80, 86.30 and key support at 86.10. Resistance seen at 87.70 and 88.20 and 88.60.
Data today from the Eurozone is not expected to have much impact on the euro, but the highlight of this week's Eurozone data will be the German Ifo survey on Tuesday, which is expected to rise for the fifth consecutive time to its highest level since September. Last week the German ZEW indicator jumped 21 points to 71.2, its highest level since July 2000 in the expectations gauge. But previous EUR/USD rallies have relied on downwardly revised assessments for the US economy. Therefore, the euro will have to find evidence of autonomous strength to regain its momentum.
This week's key US indicators include existing home sales, durable goods, Conference Board Consumer Confidence index, new home sales, jobless claims, GDP, University of Michigan Confidence survey, Chicago Purchasing Managers Index, and personal income and consumption.
The market kept the yen under pressure Monday on the expectation that Japanese investors selling of foreign bonds is likely to subside ahead of the end of fiscal year this week and Japanese investors would move their money back abroad next week after repatriating record amounts over the past couple months. Moreover, the easing of foreign demand for Japanese shares has kept the Nikkei under wraps as it fell another 0.75% today, to 11,261.
The yen remained near 3-week lows against the dollar and euro despite hopes that additional economic policy steps, including tax cuts, may be announced before the fiscal year-end. Comments by Econ Min Takenaka today that he wanted to consider tax cuts to help the economy fueled such hopes. However, the yen is expected to remain weak after the March 31 fiscal year end.
USD/JPY pushed through initial resistance at 132.45 on Friday but ran into selling at the 132.95 level, which marks key technical resistance from the selloff from 134.97 to 126.32. The dollar will need to maintain above 132.50 yen to avoid a fall back to support seen at 131.70. Resistance is seen in the 132.95 to 133.10 range. Dealers say the bull run could run out of steam on Monday after rising nearly 7 yen in two weeks. But most dealers expect the yen to continue trading above congestion around 131 yen.
USD/CHF traded flat around 1.6670 but EUR/CHF looked in danger of breaching key support at 1.4600. EUR/GBP was also expected to come under pressure if it broke below key support at 61.50.
GBP/USD traded above support at 1.4230 but remained heavy after failing to break key trendline resistance at 1.4320 last Thursday. Support holds at 1.4220, 1.4205, 1.4175. A break of 1.4175, which marks the 61.8% retracement of the 1.4085 to 1.4323 move, would call upon support at 1.4085. Resistance is seen at 1.4285 and the upside should remain contained by trendline resistance at 1.4310 followed by a reaction high of 1.4323.