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• BoJ Governor Ueda says BOJ will maintain policy
• BOJ Core CPI rises to 2.9%
• US will release UoM Consumer Confidence later today
• USD/JPY is trading at 133.87, down 0.28% on the day.

BoJ Core CPI climbs to 2.9%

Inflation in Japan is much lower than what we’re seeing in other major economies, but nevertheless, inflation continues to be closely watched by the Bank of Japan. There has been speculation that the central bank will make a shift in policy, given that inflation is above 3%, above the target of 2%. Earlier today, BoJ Core CPI, the preferred inflation indicator of the central bank, climbed to 2.9% in March. This was higher than expected and above the 2.7% gain a month earlier.

BoJ Governor Ueda will chair his first policy meeting on Thursday-Friday, and despite speculation that the BoJ will tighten policy, I expect Ueda to maintain all policy settings. Ueda has pledged to do just that and reiterated his “more of the same” pledge earlier today, in a speech to parliament. Ueda stated that “it’s appropriate to maintain monetary easing, now conducted through yield curve control”. The Governor repeated that monetary policy needed to remain ultra-loose in order to achieve sustainable inflation at the 2% target.

What was noteworthy in Ueda’s remarks was a nod to the possibility of raising interest rates, if wage growth and inflation climb faster than expected. This scenario doesn’t appear all that realistic given the current economic conditions. Ueda dampened any expectations of reducing the massive stimulus programme, saying that such a move could push inflation lower and undershoot expectations, which would be “very worrying”.

The US will release UoM Consumer Confidence later today. Consumer confidence is expected to come in at 104.0, little changed from the 104.2 reading in March. If the estimate is wide of the mark, we could see some movement from the US dollar.

USD/JPY Technical

• USD/JPY continues to test resistance at 1.3427. Next, there is resistance at 1.3499
• 133.41 and 1.3269 are providing support

ECB Chief Economist Philip Lane revealed in an interview with French newspaper Le Monde that the central bank will likely raise interest rates again at their May 4 meeting, stating, "This is still not the right time to stop." While Lane did not specify the rate hike's magnitude, he said that "it would be inappropriate to leave our deposit rate at the current level of 3%."

Lane acknowledged the decline in Eurozone inflation from 10.6% last October to 6.9% in March as a positive development, easing pressure on living costs. He expects inflation to continue falling due to supply chain bottleneck improvements and the reversal of the energy situation. However, Lane stressed that the most crucial aspect for central banks is "making sure that we get close to our target of 2% within a reasonable time period."

Lane does not believe the current situation resembles the 1970s-style persistent inflation, but he cautioned against the risk of ending up in such a scenario. Lane underlined the importance of ECB raising interest rates to ensure a "timely" return to the 2% inflation target. Regarding the European economy, he noted that while it is not stagnant, it follows a more modest path than expected prior to the pandemic and the Russian war against Ukraine.

Full interview of ECB Lane here.

Hello Traders, in this article we will go through how EURAUD reacted higher after reaching a blue box area. Here at Elliott Wave Forecast we have in place a system that allows us to measure an area in which we can expect a react to take place. We call it equal legs area or blue box area as you might have seen within our charts.

These areas provide us with at least an 85% chance of a minimum of 3 waves bounce or reaction to take place. Consequently, we can use these areas to enter in the market with a defined entry, Stop Loss and exit strategy.

The pair has been trading within a larger degree cycle since 08.25.2022. In the near term cycle it has ended wave 1 of (3) on 04.13.2023 and a 3 waves pullback was then expected. Once we had establish the first leg lower in ((w)) and then connector bounce ((x)) we presented to our members the equal legs area to buy from. Let’s have a look on how we saw it during our Midday update on 04.17.2023.

EURAUD 1 Hour Midday update 04.17.2023

As we can see we were expecting then the last leg lower within wave ((y)) of 2 to end within 1.62197 – 1.61048 equal legs area. From there we are expecting the pair to find support for wave 3 of (3).

Now let’s see how it has reached the area and what is the latest update from 04.25.2023 Asia update.

EURAUD 1 hour Asia update 04.25.2023

The pair has touched the equal legs area at 1.62182 and already reacted higher within wave ((i)) of 3 with one more high expected in (v) to end ((i)) before a 3 waves pullback in ((ii)) to follow. As a result now the trade should be set risk free after the reaction and letting it play out with the set target for wave 3 or short term traders can already take profit. Wave ((ii)) pullback should find support above 1.62182 for wave ((iii)) of 3 higher.

Daily Pivots: (S1) 166.87; (P) 167.30; (R1) 168.05; More...

Intraday bias in GBP/JPY remains neutral as consolidation from 167.95 is extending. Further rally is expected as long as 165.38 support holds. On the upside, break of 167.95 will resume the rebound from 155.33 to 169.26 resistance. However, firm break of 165.38 will argue that the corrective pattern from 172.11 is starting another falling leg. Intraday bias will be back on the downside for 162.75 support and below.

In the bigger picture, as long as 38.2% retracement of 123.94 (2020 low) to 172.11 (2022 high) at 153.70 holds, medium term bullishness is retained. That is, larger up trend from 123.94 (2020 low) is still in progress. Break of 172.11 high to resume such up trend is expected at a later stage.

Daily Pivots: (S1) 147.46; (P) 147.96; (R1) 148.81; More....

Intraday bias in EUR/JPY remains on the upside at this point, with focus on 148.38 resistance. Decisive break there will resume larger up trend, and next target will be 149.76 long term resistance. For now, outlook will remain bullish as long as 146.39 support holds, in case of retreat.

In the bigger picture, as long as 55 W EMA (now at 140.70) holds, larger up trend from 114.42 (2020 low) is still in progress for 149.76 long term resistance (2014 high). Decisive break there will resume long term up trend from 94.11 (2012 low). Next target is 61.8% projection of 124.37 to 148.38 from 138.81 at 153.64.

Daily Pivots: (S1) 0.8828; (P) 0.8844; (R1) 0.8862; More...

Intraday bias in EUR/GBP remains neutral for the moment. On the upside, firm break of 0.8864 will extend the rebound from 0.8717 to 0.8924 resistance. Further break there should confirm completion of the choppy decline from 0.8977, and should resume larger rise from 0.8545 through 0.8977 high. However, decisive break of 0.8717 support will resume the decline from 0.8977 instead.

In the bigger picture, outlook remains rather mixed for now, except that price actions from 0.9267 (2022 high) are part of the long term range pattern from 0.9499 (2020 high). With 0.8720 support intact, rise from 0.8545 is in favor to continue through 0.8977. However, firm break of 0.8720 will argue that such rebound has completed, and open up deeper fall through this support level.

Daily Pivots: (S1) 1.6430; (P) 1.6472; (R1) 1.6540; More...

EUR/AUD's rally is in progress and hits as high as 1.6574 so far today. Intraday bias remains on the upside at this point. Current up trend should target 100% projection of 1.4281 to 1.5976 from 1.5254 at 1.6949. For now, near term outlook will remain bullish as long as 1.6219 support holds, in case of retreat.

In the bigger picture, the solid break of 1.6389/6434 cluster resistance (38.2% retracement of 1.9799 to 1.4281 at 1.6389) argues that whole down trend from 1.9799 (2020 high) has completed at 1.4281 (2022 low). Further rise should be seen to 61.8% retracement at 1.7691 next. For now, outlook will stay bullish as long as 1.5976 resistance turned support holds, even in case of deep pull back.

Daily Pivots: (S1) 0.9786; (P) 0.9799; (R1) 0.9819; More...

No change in EUR/CHF's outlook as fall from 0.9995 is expected with 0.9846 resistance intact. The fall is seen as part of the whole correction from 1.0095. Deeper fall would be seen to 0.9704 and below. On the upside, however, break of 0.9846 resistance will indicate short term bottoming, and turn bias back to the upside for stronger rebound.

In the bigger picture, prior rejection by 55 W EMA (now at 0.9989) and 38.2% retracement of 1.1149 to 0.9407 at 1.0072 suggests that medium term outlook is staying bearish. That is, down trend from 1.2004 is not completed yet and is in favor to resume through 0.9407 at a later stage. However, decisive break of 1.0095 resistance will raise the chance of bullish trend reversal. Rise from 0.9407 should then target 1.0505 cluster resistance (2020 low at 1.0505, 61.8% retracement of 1.1149 to 0.9407 at 1.1484).

Daily Pivots: (S1) 1.3521; (P) 1.3544; (R1) 1.3565; More....

USD/CAD's break of 1.3552 resistance argues that decline from 1.3860 has completed. More importantly, whole corrective pattern from 1.3976 has finished with three waves to 1.3299. Intraday bias is back on the upside for further rise to 1.3860/3976 resistance zone. Decisive break there will resume larger up trend. On the downside, below 1.3521 minor support will delay the bullish case and turn intraday bias neutral first.

In the bigger picture, the up trend from 1.2005 (2021 low) is still in progress. Break of 1.3976 will confirm resumption and target 61.8% projection of 1.2401 to 1.3976 from 1.3261 at 1.4234. Firm break there will pave the way to long term resistance zone at 1.4667/89 (2016, 2020 highs). On the downside, sustained break of 55 W EMA (now at 1.3302) is needed to confirm medium term topping. Otherwise, outlook will remain bullish even in case of deep pull back.

Daily Pivots: (S1) 0.6675; (P) 0.6687; (R1) 0.6708; More...

AUD/USD's consolidation from 0.6563 is still ongoing and intraday bias stays neutral at this point. On the downside, break of 0.6619 will indicate that decline from 0.7156 is resuming through 0.6563 low. Nevertheless, sustained break of 0.6804 will bring stronger rally back to 61.8% retracement of 0.7156 to 0.6563 at 0.6929.

In the bigger picture, as long as 61.8% retracement of 0.6169 to 0.7156 at 0.6546 holds, the decline from 0.7156 is seen as a correction to rally from 0.6169 (2022 low) only. Another rise should still be seen through 0.7156 at a later stage. However, sustained break of 0.6546 will raise the chance of long term down trend resumption through 0.6169 low.