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At 2:00:00 AM Germany Feb Retail Sales m/m real (exp -0.4%, prev 1.4%) Germany Feb Retail Sales y/y real (exp -0.3%, prev -1.8%) At 2:40:00 AM France Feb Ind Prod m/m real (exp -0.9%, prev -1.4%) France Feb Ind Prod y/y real (exp 0.3%, prev 0.6%) At 2:45:00 AM France March CPI y/y prel. (exp 2%, prev 2%) France March CPI m/m prel. (exp 0.4%, prev 0.1%)
The Bank of Japan raised its economic assessment for a second consecutive month today but the yen continued to fall across the board. Telling in the bank's review was that it cited a recovery abroad and weaker yen to keep lifting exports and the ailing economy. But it also said that Japan's economy continues to deteriorate. Therefore, traders have poured in to sell the yen again after a brief rise to 130.20 this week sent Japanese officials clamoring to talk down their currency, which they see as vital to a recovery.
USD/JPY rose to a one-week high of 132.26, above 131.98 the 50% retracement of last week's decline from 133.80 to 130.20. The dollar now has in its sights the 61.8% retracement at 132.40 and a break above that level is seen calling upon 133.80. However, given the absence of Japanese investment abroad in the new fiscal year, the yen could trade rangebound between 130.20 and 133.80 in the near-term. Support is seen at 131.45/55 and 131.20 ahead of 130.95 the Fibonacci retracements of the move from 130.20 to 132.26.
Only a break below 130.95 would be problematic for the renewed bull stance on USD/JPY, but by acting when they did, the Ministry of Finance has put a psychological cap on the yen around 130. Official comments this week cemented views that the authorities would not want the dollar to fall under the 130.00 yen level because it could damage the one bright spot of the economy - exporting. Traders have pared back long USD/JPY positions since the beginning of the month when Japanese capital outflow was not detected. But dealers now would not want to test the authorities, so the dollar should remain well supported above 130, but remain under 133.80 highs.
Today's data from the euro area is expected to show weakness in German retail sales but a slight improvement in French industrial production in February. The data should have little impact on markets who are bracing for key retail sales and consumer confidence data from the US later in the day.
Thursday's sell off on Wall Street in a wave of accounting scandal failed to dent the dollar much against the European majors, but the euro and sterling are both holding strong and appear likely to add to their gains in the near term as the dollar has too much uncertainty on its hands for the moment.
EUR/USD broke above trendline resistance 88.15 and rose to an overnight high of 88.44 from where it gave back gains and fell to a session low of 87.98. This is below the trendline and is now tarnishing the value of that indicator as the pair has shown a couple of false breakouts. However, from a technical perspective, as long as support support at 87.75 holds, the next move should be higher. This level marks the 61.8% retracement of the one-cent rise from 87.34 to 88.44 overnight. However, looking ahead, heavy resistance is seen in the 87.50/80 region, which will be tough to break as the 200-day moving average lies at 87.80.
GBP/USD is again tested support at 1.4360 after failing to break back above 1.44 overnight. A slip below 1.4360/50 should retest overnight lows around 1.4335 and below that at 1.4285. Sterling slipped after hitting a one-week high of 1.4400 overnight as it was unable to maintain above key support at 1.4387 which would have put last week's reaction high of 1.4429 in sight and open the door for a run at 1.45. Nevertheless, the upward trend continues and GBP/USD could hit 1.45 before becoming heavy again. Only a break below support at 1.4343, which marks the 38.2% retracement of the 6-month downtrend from 1.4828 to 1.4043 would target 1.4285, and 1.4260 which is 50% Fibonacci support and previous trendline resistance. But only a fall below 1.4200 would be a sign of an impending bear trend.