Yen Feeling Heavy After BOJ

As we said in one our forex update today, the Japanese Yen is under pressure today from the BOJ (Bank of Japan). There has been a run for safety over this week as we have seen in the CHF and JPY pairs, both of which have seen some considerable downside.

But the market is feeling more adventurous today and the safe haven currencies are getting roughed up. Our buy forex signal in EUR/CHF hit take profit a while ago, while USD/JPY climbed nearly 10 pips.

The BOJ is not turning hawkish like its peers (FED, BOE and ECB). The economy is not picking enough speed in Japan so the BOJ is staying on the sidelines. The market was expecting hawkish comments, but it´s not getting any from Kuroda, so the USD/JPY is turning around.  

USD/JPY Trade Idea – This forex pair remains a buy in my opinion unless something really horrible happens and the forex market panics, which would greatly increase demand for safe haven currencies. There´s no sign of that anywhere, so I will wait for a retrace lower on the H1 forex chart and then pick a spot to buy.

ECB in the Spotlight

The ECB (European Central Bank) is holding its monthly meeting and President Mario Draghi will be up shortly. They kept the rates and QE (quantitative easing) unchanged as expected, so no surprise there, despite the Euro diving around 60 pips lower.

Interest remains on Draghi's words. Will he announce a start date for the reduction of the balance sheet? I doubt it since there were no hawkish comments in the statement. The Eurozone bond yields are slipping as well, so the market is not expecting anything else today from him, that´s how I see it. 

EUR/USD Trade Idea – EUR/USD has been pushing higher for 2 reasons: weak US inflation and better economic data from the EU, which is supposed to turn the ECB hawkish. Inflation is stalling in all major economies including the Eurozone and the ECB doesn´t want to turn hawkish. So, I'll remain a seller in this forex pair, but I´d like to see another run higher close to 1.15 before pulling the trigger.

GBP Feeling Dizzy Despite better Retail Sales

The British Pound is also feeling heavy today. The UK retail sales jumped by 0.6% today as opposed to the expected 0.4%, but that offered no consolation for GBP bulls.

GBP traders had been waiting for this release for a couple of days. GBP/USD had been stuck close to 1.30 during this time, waiting for some direction. Well, retail sales increased, but not enough to satisfy the market.

So, GBP/USD finds itself 100 pips lower, but the weakness is also coming from the USD side, which has been quite resilient today. That´s impressive considering the last couple of weeks when the Buck lost several cents across the board.

GBP/USD Trade Idea – We missed the short trade on this forex pair. I had been waiting for it, but the USD weakness over the last couple of weeks has kept me on the sidelines. Although, I would seriously consider opening a long term sell forex signal around 1.30 if we retrace up there. We´re not very far so it is possible, although I don´t think it will happen today.