USD/JPY Extends Gains Post-BoJ Meeting

The Bank of Japan didn’t change any policy settings at Friday’s meeting, which was the first to be chaired by New Governor Kazuo Ueda. The yen took a tumble of 1.3% and the downward spiral has continued on Monday, with USD/JPY rising as high as 136.98. Investors may have been disappointed that the Ueda didn’t make any changes, but on closer examination, the BoJ provided some hints that change is coming which could explain the yen’s sharp fall.

Forex and Cryptocurrency Forecast

Due to the lack of significant economic news, the EUR/USD dynamics in recent days has been determined by statements by representatives of mega-regulators regarding interest rate hikes at the upcoming meetings of the US Federal Reserve on May 2/3 and the ECB on May 4.

Modest Movements in Financial

The week starts off with a thin data calendar, German Ifo Index will be released for April, consensus is looking for a modest rise following the upbeat PMIs last Friday.

Lack of Further Liquidity and Investors' Positioning Put a Dent in China's Stock Market Optimism

China’s stock market has started to show signs of fatigue after a magnificent three-month rally of 22% from the October 2022 low to January 2023 high as seen on its benchmark CSI 300 Index. Since 18 April 2023, it has declined by close to -4% and underperformed a basket of developed nations’ stock markets.

Cryptocurrencies Have Cleared Overbought Conditions

Bitcoin has fallen 8.2% in the last seven days to $27.4K but is consolidating near levels from the second half of March. The market has erased its previous growth momentum and is now testing the strength of the medium-term uptrend in the form of the 50-day moving average (now at $27K). A break below this would call into question the bull market’s strength, while a consolidation below $26.6K could be the prologue to a more profound decline.

S&P 500 Analysis: A Hot Week of the Reporting Season Is Coming

Also, from the technical side, note the restraining influence of the resistance line (1) 4,170, which we have pointed out several times. If the reports this week turn out to be disappointing, this may lead to a bearish breakdown of the median line of the current channel (shown in blue), which will open up the prospect of another descent to its lower border (2).

BTC/USD Analysis: Is Bitcoin a Reserve Currency?

The bold predictions of crypto enthusiasts are becoming more fantastic as the BTCUSD chart forms a bearish pattern — a false bullish breakout of a long-term downward channel. Orange marks indicate price action, which confirms the validity of the channel: if the price continues to move within it, the scenario of a decline to the USD 20k level will become more realistic.

USD/JPY Extends Rally Ahead of BOJ Core CPI

This week’s data calendar out of Japan will be dominated by inflation releases and the Bank of Japan’s two-day meeting at the end of the week. Traders will be keeping a close eye on BoJ Core CPI, which will be released on Tuesday. The index, which is the BoJ’s preferred inflation gauge, fell from 3.1% to 2.7% in February. Another drop would support the central bank’s view that inflation is falling back towards the 2% target.

Sunset Market Commentary

On FX markets, EUR/USD returned north of 1.10 (currently 1.102). The move probably is more due to euro strength, rather than USD weakness as markets understand that the single currency will probably continue to receive ‘hard’ interest rate support at & beyond next week’s policy meeting (cf Wunsch comments), while the Fed will probably take a pause in its tightening cycle.

April Flashlight for the FOMC Blackout Period: Is the Tightening Cycle Coming to an End?

We expect the FOMC to raise the target range for the fed funds rate by 25 bps on May 3, bringing it up to 5.00%-5.25% from 0.00%-0.25% only 14 months ago. We also anticipate that the Committee will continue quantitative tightening (QT) at its current pace.