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The Japanese yen strengthened after a senior Bank of Japan (BOJ) official said that the bank will be willing to ramp up stimulus ‘through a combination of steps’ if the economy loses momentum. In a statement, Eiji Maeda, who oversees the monetary policy said that the new stimulus would take into account the impact of the economy and the banking system. He said that the bank has the tools ready in place to ease monetary policy as necessary. These tools include further lowering of interest rates, additional asset purchases and printing more money. Maeda said this a day before the bank started its two-day monetary policy meeting in Tokyo.

Focus will be on the USD as investors receive more housing data. Yesterday, the National Association of Realtors released the existing home sales data that missed the analyst consensus. In March, the existing home sales dropped by 4.9% to 5.21 million. This was a sharper decline than the 3.8% decline that was expected by the market. Today, traders will receive the new home sales numbers, which are expected to decline from 667 to 647. This will be a 3% decline.

Traders will also continue paying more attention to crude oil. Yesterday, the price surged after the United States refused to extend the existing waivers on Iran purchases. The goal is to bring exports to zero. Today, the American Petroleum Institute (API) will release inventories for the past week. This number is expected to show that inventories continued to slump. Last week, there was a drawdown of more than 3 million barrels. Tomorrow, data from EIA is expected to show a drawdown of 167K barrels.

USD/JPY

The USD/JPY pair declined to an intraday low of 111.63. This was below the important channel that the pair had created. After this drop, the pair pared some of these losses. On the chart below, this price is slightly below the middle line of the Bollinger Bands. It is also below the important 25-day moving averages while the RSI has started moving up. For the next two days, the pair will likely be a bit volatile as the BOJ makes its decision.

EUR/USD

The EUR/USD pair was relatively unmoved ahead of key housing numbers from the US. On the four-hour chart, the price is along the 23.6% Fibonacci Retracement level. It is also along the 25-day and 50-day moving averages. The volumes have remained low while the accumulation and distribution indicator has continued to decline. The pair could continue moving upwards to test the 38.2% Fibonacci Retracement level of 1.1300.

XBR/USD

The XBR/USD pair remained at the highest levels since November as investors braced for fresh supply cuts. The pair is now trading at 73.60. On the eight-hour chart, the price is below the 25-day and 50-day moving averages. The Stochastic Oscillator has moved to above the overbought level while the accumulation and distribution indicator has continued to move up. With this momentum, the pair could continue moving upwards to test the previous highs of above $80.

Pivot (invalidation): 65.25

Our preference Long positions above 65.25 with targets at 66.45 & 66.75 in extension.

Alternative scenario Below 65.25 look for further downside with 64.70 & 64.25 as targets.

Comment The RSI is bullish and calls for further upside.

Pivot (invalidation): 15.0800

Our preference Short positions below 15.0800 with targets at 14.9200 & 14.8700 in extension.

Alternative scenario Above 15.0800 look for further upside with 15.1400 & 15.1700 as targets.

Comment As Long as 15.0800 is resistance, look for choppy price action with a bearish bias.

Pivot (invalidation): 1278.00

Our preference Short positions below 1278.00 with targets at 1273.50 & 1271.00 in extension.

Alternative scenario Above 1278.00 look for further upside with 1279.80 & 1282.50 as targets.

Comment The RSI is mixed to bearish.

Pivot (invalidation): 2895.00

Our preference Long positions above 2895.00 with targets at 2918.00 & 2925.00 in extension.

Alternative scenario Below 2895.00 look for further downside with 2882.00 & 2873.50 as targets.

Comment The RSI is mixed with a bullish bias.

Pivot (invalidation): 12140.00

Our preference Long positions above 12140.00 with targets at 12285.00 & 12330.00 in extension.

Alternative scenario Below 12140.00 look for further downside with 12095.00 & 12063.00 as targets.

Comment The RSI is bullish and calls for further advance.

Pivot (invalidation): 5.8460

Our preference Short positions below 5.8460 with targets at 5.8020 & 5.7850 in extension.

Alternative scenario Above 5.8460 look for further upside with 5.8620 & 5.8860 as targets.

Comment The RSI calls for a new downleg.

New Zealand Dollar is among the weakest today, together with Australian and Canadian. Selloff in Kiwi picked up momentum last week after Q1 CPI release disappointed by slowing to 1.50%. There are increasing expectation that RBNZ could cut interest rate at the upcoming meeting on May 8.

In the latest weekly commentary, Westpac noted that May's meeting is a "close call". A cut is supported by "continued low level of inflation and softness in business sector indicators". However, "longer-term outlook for the economy is looking less worrying than it did a few months ago, especially given the recent news that there won't be a capital gains tax." On the other hand, ANZ "long-end yields have pre-empted a cut" in May. But they expected "another move lower once the first cut is delivered and markets open up to the possibility of a third. "

NZD/USD fall from 0.6938 resumes today by taking out 0.6666 temporary low and hits as low as 0.6659 so far. Further decline is expected as long as 0.6782 resistance holds, towards 0.6551 support. The corrective pattern from 0.6424 could have completed with three waves to 0.6938 already. Firm break of 0.6551 should add to the case of medium term down trend resumption through 0.6424 low. Nevertheless, rebound from 0.6551 will extend the corrective pattern with one more rising leg.

Pivot (invalidation): 0.7140

Our preference Short positions below 0.7140 with targets at 0.7115 & 0.7100 in extension.

Alternative scenario Above 0.7140 look for further upside with 0.7155 & 0.7170 as targets.

Comment The RSI advocates for further decline.

Pivot (invalidation): 1.3375

Our preference Short positions below 1.3375 with targets at 1.3330 & 1.3315 in extension.

Alternative scenario Above 1.3375 look for further upside with 1.3390 & 1.3405 as targets.

Comment As Long as the resistance at 1.3375 is not surpassed, the risk of the break below 1.3330 remains high.